EUR/USD waits on ECB comments

The EUR/USD rate continues to hover just below the $1.40 level ahead of Mario Draghi’s speech today at 1.30pm (London time).

On 3 April last month the European Central Bank kept its base rate at 0.25%. Also enclosed in the afternoon discussion was that they did not want to see the Euro gain too much strength, and that they were closely monitoring the situation. No specific reference as to what level would be deemed too high or what, if any, action they would take if it got there. Considering the EUR/USD rate, on 3 April, was some 200-pips lower than where we find ourselves today, currency traders will be keeping a watchful eye on today’s events.

The other side of the equation is the US dollar. Yesterday saw Federal Reserve chair Janet Yellen delivering a speech to the US Joint Economic Committee of Congress, then grilled in a Q&A session that lasted several hours. Despite being pressed aggressively to divulge a timeline for when she would anticipate raising interest rates, she managed to keep her cards close to her chest. Today is the turn of the Senate Budget Committee to try and crowbar a timeline out of her.

EUR/USD is once again back to year highs around the $1.3925 level, and the relative strength index has moved into overbought territory. Even though we might not see action, we are likely to see comments from the ECB that will put a negative sentiment on the currency pair, so a drift back down towards $1.38 could be envisaged.  

Spot FX EUR/USD chart

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