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The last couple of months have seen EUR/USD oscillate around the $1.38 level in a $1.37-$1.39 range, unable to make a meaningful break either above or below these levels. Today’s price movement strongly points towards a continuation of this upwards leg.
The tone of comments made by Janet Yellen and a number of Federal Open Market Committee members, hinted towards a slightly slower pace for the implementation of increased interest rates. The trigger for this has been the markets anticipation of slightly higher US jobless claimants. Markets have been trying to gauge a realistic timeline for rate rises following the initial comments made by Fed chair Janet Yellen. It appears that a policy similar to her predecessor, Ben Bernanke, of talking about it early and talking about it frequently, will pave the way for a more calculated and less reactionary market when rates are finally increased.
If this afternoon’s US unemployment claims increase, this could add to the momentum. We would maintain our current long exposure to the EUR/USD and look for a retest of the $1.39 level. Only a close below the 50-day moving average would lead us to change our outlook.