EUR/USD to extend its rebound if Yellen focuses on low borrowing costs


EUR/USD has clawed its way up from the one-month lows amid a better market mood. According to FXStreet’s Analyst Yohay Elam, the testimony from Janet Yellen, in her confirmation hearings for Treasury Secretary, can turn the dead cat bounce into a roaring rally.

See – US: Yellen to avoid comments on the US dollar – Rabobank

Key quotes

“Biden already said that ‘everybody should pay their fair share’ and signaled closing loopholes and hiking taxes on the very rich. While such moves would not hurt the majority of Americans, Wall Street would shudder and stocks could reverse their gains. In such a rick-off scenario, the safe-haven US dollar would gain and the recent bounce in EUR/USD would prove a dead cat bounce – only a minimal upward move followed by a fresh free-fall.”

“Spending is necessary due to the current situation and is made easier by cheap borrowing costs. If the former Fed Chair points to low yields when asked about funding the stimulus, markets may interpret it as a sign that no new taxes are coming  – positive for risk.”

“Moreover, some may interpret any leaning on cheap funding as a hint that Yellen is already working with Powell – that perhaps she knows of an upcoming expansion in the bank's bond-buying scheme.”

“Coronavirus continues raging on both sides of the Atlantic. German Chancellor Angela Merkel is contemplating not only extending the lockdown but also tightening it. Italy's Prime Minister Giuseppe Conte is facing a crucial vote of no-confidence in the Senate after surviving one in the lower chamber.” 

“Bears have the upper hand. For bulls to recover, EUR/USD needs to recapture 1.2125, a former triple-bottom. It is followed by 1.2175, which was a swing high last week. Support is at the one-month low around 1.2050, followed by the round 1.20 level and then by 1.1960.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD hovers around 1.0850 as US Dollar stabilizes

EUR/USD hovers around 1.0850 as US Dollar stabilizes

EUR/USD is trading sideways at around 1.0850 in European trading on Monday. A lack of fresh fundamental catalysts and holiday-thinned market conditions leave the pair oscillating in a tight range. 

EUR/USD News

GBP/USD keeps range near 1.2750 amid holiday-thinned trading

GBP/USD keeps range near 1.2750 amid holiday-thinned trading

GBP/USD is trading modestly flat, keeping its range near 1.2750 in the European morning on Monday. The pair is subject to thin liquidity and minimal volatility, courtesy of US and UK market holidays. 

GBP/USD News

Gold price edges higher, Israel strikes Rafah and boosts safe-haven flows

Gold price edges higher, Israel strikes Rafah and boosts safe-haven flows

Gold price (XAU/USD) gathers strength on Monday. The softer US Dollar (USD) and the renewed escalating geopolitical tensions in the Middle East provide some support to the yellow metal. 

Gold News

BTC/USD appears poised for further outperformance

BTC/USD appears poised for further outperformance

Last week was another positive for BTC/USD, which was up +1.9% as of London’s close on Friday despite finishing considerably off its best levels. Price movement on the weekly timeframe has been working between the limits of a potential bullish flag pattern.

Read more

Final full week of May welcomes updated inflation data

Final full week of May welcomes updated inflation data

Monday will likely be a snoozer, with US and UK banks closing in observance of Bank Holidays. The majority of focus this week will fall on Friday’s US PCE inflation for April, alongside personal income and spending. 

Read more

Forex MAJORS

Cryptocurrencies

Signatures