EUR/USD turns flat near 1.12 as USD regains traction

The EUR/USD pair gave back all of its daily gains during Fed's Chairwoman Yellen's press conference and slipped back into its comfort zone around the 1.12 mark. As of writing, the pair is trading virtually unchanged at 1.1212.

Earlier in the session, after the dismal inflation data from the United States, the pair leaped to its highest level in more than eight months at 1.1294, inching closer to the election day spike at 1.13. However, during her press conference following the FOMC's decision to hike its benchmark rate by 25 basis points, Yellen downplayed the low CPI reading by suggesting that it was important not to overreact to a few inflation reading. Yellen also made it clear that the Committee's expectations were essentially unchanged since the March meeting.

Despite today's sharp fluctuations witnessed in the NA session, the pair is headed for another daily close near the 1.12 handle, suggesting that it remains directionless in near-term. Tomorrow's economic calendar won't be offering any critical data that could change that situation. The US Dollar Index is also marching to a flat daily close near the 97 handle.

Technical outlook

The RSI on the daily graph for the pair continues to move sideways a little above the 50 mark, supporting the neutral outlook. The pair needs to make a decisive break above the 1.1295/1.1300 (daily high/Nov. 9 high) area to extend its rise towards 1.1365 (Aug. 18 high) and 1.1400 (psychological level). On the downside, supports align at 1.1110 (May 30 low), 1.1000 (psychological level/ Fib. 38.2% retracement of April/June rise) and 1.0960 (May 7 low). 

FOMC & Yellen headlines: 

• Fed's Yellen: We could start trimming balance sheet relatively soon
• Fed's Yellen: I don't think regulations have played a big role in impeding the economy
• Fed's Yellen: We could revisit in the future the right level of its inflation target
• Fed's Yellen: Growth has picked up somewhat, but remains low
• Fed's Yellen: Important not to overreact to a few inflation readings; data can be noisy
• Fed's Yellen: Fully intends to serve out term as Chair
• Fed's Yellen: Employment is near maximum sustainable level
• Fed's Yellen: Steady labor participation is positive
• FOMC's decisions regarding monetary policy implementation - Jun 14, 2017
• Fed raises rates by 25 bps; second hike of 2017