EUR/USD Closes in on 1.10 on Fed Rate Caution

The euro made its third attempt this month to climb and stay above $1.10 as Federal Reserve Vice Chairman Stanley Fischer added to speculation U.S. interest rates will increase at a limited pace as stimulus expands in Europe.

The single currency extended its biggest weekly gain in three years on Monday after Fischer said there won’t be a “smooth upward path” for interest rates even as the first increase may be warranted before the end of 2015. The euro has strengthened 3.2 percent versus the dollar since the Fed on March 18 cut projections for future rates, inflation and growth.

“Fischer’s comments dashed market speculation for a June rate hike and with the Fed stance, expectations are now pushed back to September,” said Kengo Suzuki, chief currency strategist at Mizuho Securities Co. in Tokyo. “It squashed greenback-buying momentum and led to a correction of one-sided dollar purchases and euro sales. The euro could reclaim $1.10. At the same time, it’s difficult to see the euro rising steadily and any upside will likely spark fresh selling.”

Bloomberg

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