EUR/USD (current price: 1.1265)
The most traded currency pair had a very choppy day as we expected, as investors hold their breath before Janet Yellen’s take on the world economy. An interest rate increase looks very unlikely here, as the FED Chair pointed out meaningful international risks for the U.S. growth. The German IFO Business Climate index and U.S. New Home Sales both came in worse than expected, but the common currency still managed to gain 0.4% on the USD, as safe haven buying favored the Euro, as risk assets underperformed.
Our assessment: No strong directional movement is expected in the pair until the FOMC meeting, despite the fact that it broke below the short-term advancing trend-line.
