Increased Possibility of Interest Rate Hike

EUR/USD ended the month with substantial gains as the Vice Chair of Federal Reserve reported an increased possibility of interest rate hike in the month of September. EUR/USD traded in a range between 1.1172 and 1.1262 before it settled at 1.1215.

Trend of EUR/USD:

The pair was up by 0.0028 or 0.25% on the session. In August, EUR/USD gained more than 2.5% in spite of a losing streak that lasted 4 days last week when it fell below 1.12. The euro remains down by more than 7% against the dollar. EUR/USD gained support at 1.0847 which is the low from 5^thAugust and suffered resistance at 1.1616 which is the high from 25^thAugust.

Fed Statements:

The Vice Chair of Fed blamed the plunging energy prices, a stronger value of dollar and a soft commodities market for creation of downward pressure on inflation. The Fed is keeping a close eye on the slack in the U.S economy and the labor market as it decides whether it will raise short-term interest rates for the first time in nearly 10 years. A gradual reduction of slack is associated with less downward pressure on inflation.

Strength of the Greenback:

The U.S. Dollar Index measuring the strength of the greenback as compared to a basket of six other major currencies gained 0.02% and closed at 95.98. The index has closed higher on five of the last six sessions.