The EUR/USD pair quickly reversed a knee-jerk fall and spiked over 50-pips from lows following the release of the text of the Fed Chair Janet Yellen's upcoming testimony.
The US Dollar came under some fresh selling pressure after the text lacked any surprise hawkish hints and dashed hopes of a rate hike action in September, with markets pricing in a 53% chance of a December hike as compared to 60% before the prepared remarks. The same is being reaffirmed by plunging US Treasury bond yields, which lifted the pair back closer to the key 1.1500 psychological mark.
• Fed's Yellen testimony: Additional gradual rate hikes likely appropriate over next few years
The up-move, however, got sold into near 1.1480 area and the pair resumed with its profit-taking slide to refresh daily lows near the 1.1420 region amid some renewed greenback buying interest at lower levels.
Investors now gear up for the Q&A, where questions on easing inflationary pressure might infuse another bout of extreme volatility in the forex market and provide some fresh opportunities for short-term traders.
• Fed's Yellen testimony: Balance sheet reduction will likely begin this year
Technical outlook
Valeria Bednarik, Chief Analyst at FXStreet writes, "the 4 hours chart shows that the price stands near its recently accomplished yearly high of 1.1489, maintaining its bullish stance, given that the price recovered sharply after nearing a bullish 20 SMA, whilst technical indicators turned back north after correcting modestly lower from overbought readings. Beyond the daily high, the pair will likely extend its advance up to the 1.1520/30 region, ahead of 1.1560."
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