EUR/USD Forecast: Yellen's Vague Comments Weigh on the USD

EUR/USD Forecast: Yellen's Vague Comments Weigh on the USD

7 June 2016, 12:22
Roberto Jacobs

EUR/USD Forecast: Yellen's Vague Comments Weigh on the USD

The EUR/USD pair trades near its recent highs, but still below the 1.1400 level, despite broad dollar's weakness. After Janet Yellen failed to motive dollar's bulls with vague comments over a future rate hike, the greenback resumed its decline against most of its major rivals, and even the Pound finally filled the weekly opening gap and extended its gains up to fresh highs. 

The release of positive European GDP figures was not enough to boost the common currency, but in the first quarter of the year, the economy grew 0.6%, above the previous 0.5%, with the year-on-year up 1.7% compared to the 1.5% expected. The US won't publish any big market mover today, but some minor employment data early in the morning.


That leaves the pair in the hands of market sentiment, expected then, to extend its rally over the upcoming hours. The 4 hours chart shows that the technical indicators have resumed their advances, despite being in overbought territory, whilst the 20 SMA heads strongly up below the current level, in line with further advances. 

The pair has now scope to extend its gains up to 1.1420, the 61.8% retracement of its latest slide, with a break above it opening doors for a continued advance up to 1.1460. The downside is limited by buying interest around 1.1330, and seems unlikely that the pair can break below this last, yet if it does, it can extend its downward move down to 1.1280 without harming the dominant bullish trend.


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