Dollar dips on Yellen’s comments

EUR/USD and GBP/USD are higher today as Janet Yellen appears to be content to keep rates on hold. 

US dollar
Source: Bloomberg

Sterling eyes $1.55

The pound is edging higher ahead of Mark Carney’s speech at One Bank’s research agenda launch at 10am (London time). The market is expecting a continuation of the hawkish commentary that has been coming out of the Bank of England recently. Even though the minutes from the latest BoE meeting showed that all nine members were in favour of keeping interest rates unchanged, two of the members were leaning towards a rate rise, and this was enough to trigger a round of buying.

GBP/USD has been in an upward trend since the start of the month and the short-term trend is showing no signs of slowing down. The $1.55 mark is currently acting as resistance and a move through it makes $1.56 the target. Beyond that traders will look to $1.57. If GBP/USD fails to breech $1.55, then the downside support at $1.5460 will be in sight and if that mark is punctured then $1.54 will be the target.

Greek reforms approved

EUR/USD has gained ground as the reforms that have been put forward by the left-wing Syriza party have been accepted, and this will help the single currency in the short-term. The problem in Greece and the wider eurozone are far from fixed and we will be dealing with the Greek situation again in a number of months when the extension to the bailout runs out.

We are expecting to hear from Janet Yellen and Mario Draghi at 3pm and 4.30pm (London time) respectively. Yesterday, Ms Yellen suggested that an interest rate rise in the US is on a ‘meeting-by-meeting’ basis. The US central bank chief stated that once the word ‘patient’ disappears from the Federal Reserve’s update the market should gear up for an interest rate rise. It appears that Ms Yellen is in no hurry to raise rates and if that sentiment is conveyed today it will lead to EUR/USD buying.

The currency pair is currently trading at the 200-hour moving average at $1.1375. A drop below this level will bring downside support at $1.1340 into play and the next level of support below that is $1.13. The $1.14 level is acting as resistance and a move through will put $1.1440 in sight.

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