Forex snapshot

Federal Reserve chair Janet Yellen’s speech which will take place this afternoon continues to loom over currency markets.           

Fed chair Janet Yellen
Source: Bloomberg

EUR/USD looks to stay around $1.28

The aggressive move higher in EUR/USD on Wednesday was eaten into yesterday, and so far Friday’s traders are also looking upon it with a pessimistic slant. This is the quietest day of the week as far as economic data releases are concerned, however we will be hearing from Fed chair Janet Yellen at 1.30pm. Considering last week’s Federal Open Market Committee minutes, and to a lesser extent James Bullard’s outburst, it is highly likely that there will be clear dovish tones to her speech.

EUR/USD flirted with the 50-day moving average on Wednesday, which continues to weigh on it. Having dipped back below the $1.28 level, EUR/USD looks like it could stay around here for the short term.

GBP/USD still bearish

As my colleague David Madden highlighted yesterday, the bearish trend in GBP/USD remains in place. Over the last two weeks it has oscillated around the $1.60, and has had a broadly lateral move. The chopping and changing of market perception regarding the timelines for both the Fed and the Bank of England to raise interest rates has seen GBP/USD traders begin to lose a sense of direction. No doubt these afternoon’s comments from Janet Yellen will strike a dovish tone as she tries to ensure there is suitable maneuverability for when they act.

A retest of the $1.60 level could well materialise over the course of the day.

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