The euro traded lower against the US dollar on Wednesday, following the announcement that Federal Reserve Vice Chairman Janet Yellen will probably be the first lady to lead the US central bank in its 100-year history.
EUR/USD slipped to a session low at 1.3536 at 7:06 GMT, after which consolidation followed at 1.3541, losing 0.25% for the day. Support was likely to be received at October 2nd low, 1.3503, while resistance was to be met at October 8th high, 1.3606.
The US dollar received certain support after it became clear that Federal Reserve Bank Vice Chairman Janet Yellen would probably succeed current Chairman Ben Bernanke, whose term ends on January 31st. She was also the favorite candidate, as shown in surveys of economists and had the support of 20 members of the Senate Democratic caucus, who signed a July 26th letter to President Barack Obama. Yellen has been known as one of the upholders of the unprecedented monetary stimulus program. If she is confirmed as the next Chairman, under her leadership Feds policy may remain accommodative for a bit longer. The announcement will come today during an event at the White House, according to an e-mail by an official.
In addition, US budget deadlock continued to persist. It became clear that US Senate Democrats are planning to conduct a test vote before the end of this week on a measure that would grant President Barack Obama authority to increase the 16.7 trillion USD debt ceiling, probably for one year, unless two-thirds of both chambers of Congress disapprove. Nation’s borrowing authority is expected to lapse on October 17th.
In the mean time, industrial production in Germany probably increased 1% in August, after declining 1.7% during the preceding month, a report is expected to show later in the day, according to the median estimate in a survey by Bloomberg News. Better than projected results would certainly heighten the appeal of the euro.
At the same time, European Central Bank President Mario Draghi is scheduled to take a statement today at Harvard University’s John Kennedy School of Government in Cambridge, Massachusetts. He will probably affirm central bank’s focus on inflation rate, according to Adam Myers, the European head of foreign-exchange strategy at Credit Agricole Corporate & Investment Bank in London.
Elsewhere, the euro was little changed against the sterling, as EUR/GBP cross dipped 0.07% to trade at 0.8435 at 7:38 GMT. The United Kingdom is expected to release data on its trade balance and manufacturing production later on trading Wednesday. EUR/JPY pair was gaining 0.14% for the day to trade at 131.71 at 7:40 GMT.