EUR/USD Into Yellen's Speech: Scope For Further Gains
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Today’s main focus will be Fed Chair Yellen’s speech at 1730 BST, where we expect her to emphasize data dependency and a preference for waiting for more information before resuming hikes.
Friday’s payroll report is likely to be viewed as worrying for the Fed given the sharp slowing of the pace of job creation and we view that the market is unlikely to rebuild Fed expectations significantly in the near-term. The USD should therefore be generally weak vs. other core currencies.
We see scope for EURUSD to extend gains up towards its early May highs near 1.17 over the next few weeks. We view that central bank easing outside the US the main constraint on USD losses, but the ECB has made clear this past week that it remains on hold for now.