Yellen defends the hawkish rate hike, EUR/USD surrenders gains

Fed chief Janet Yellen defended the hawkish rate hike by sounding upbeat on the economy and asserting the Q1 slowdown was transitory. 

Thus, the bid tone around the American dollar strengthened, pushing the EUR/USD back to 1.1210; the level last seen before the dismal US CPI release. The 10-year treasury has recovered slightly to 2.14%. 

The FOMC is monitoring inflation developments closely

Yellen said the central bank is monitoring the inflation developments closely, but refrained from sounding hawkish. The central bank head said the economic growth seems to have rebounded in the second quarter and added, “Additional rate hikes are appropriate over the next few years”. As for the balance sheet reduction, Yellen said the process is expected to begin later this year. 

The spot was last seen trading around 1.1233 levels. 

EUR/USD Technical Levels

A break above immediate hurdle of 1.1233 (1-hour 200-MA) would open up upside towards 1.13 (zero figure) and 1.1327 (Sep 8 high). On the other hand, a breakdown of support at 1.1197 (daily low) may yield a pullback to 1.1155 (support offered the trendline sloping higher from Apr 17 low and May 11 low) and 1.1109 (May 30 low).