The euro rallied together with other currencies against the US dollar after Janet Yellen, Chairperson of the Federal Reserve, signaled that monetary tightening would be cautious and gradual. The currency also rose versus the Japanese yen but remained flat against the Great Britain pound.
Last week, Fed officials were talking about the possibility of an April interest rate hike. Yet that possibility all but evaporated after Yellen spoke about caution in regards of policy adjustments:
Given the risks to the outlook, I consider it appropriate for the Committee to proceed cautiously in adjusting policy. This caution is especially warranted because, with the federal funds rate so low, the FOMC’s ability to use conventional monetary policy to respond to economic disturbances is asymmetric.
As of now, the chances for an April hike stand at just 5% according to the CME FedWatch page.
There will be plenty of macroeconomic reports released from the eurozone later this week, but nothing especially important. Therefore, it is likely that the euro will continue to be driven by news from the United States, particularly employment data.
EUR/USD climbed from 1.1194 to 1.1300 as of 19:48 GMT today. EUR/JPY rose from 126.99 to 127.30. EUR/GBP traded at its opening rate of 0.7853.
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