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Friday’s trading on the euro closed in the green. The EUR/USD rate restored from a minimum of 1.0495 to 1.0623 (+128 pips). This began as a correctional movement against the euro’s weakening over the previous two days. In Europe, the euro strengthened against the dollar to 1.0573, and after Janet Yellen’s speech, to 1.0623.

In her Friday address, the head of the US Fed confirmed that the central bank is set to increase interest rates during their meeting on the 15th of March. Given that traders were buying dollars on the back of speeches from other Fed members, they were able to make a profit following Yellen’s speech as it brought about a sharp drop in the dollar across the whole currency market.

According to latest data from CME Group’s FedWatch, the probability of a rate hike in March has gone up from 75.3% to 79.7%, in May from 79.0% to 81.5% and in June from 89.6% to 90.2%. US 10-year bond yields have fallen by 1.14% to 2.482%.

Market expectations:

Today is Monday, correction day. The economic calendar is fairly empty. From my forecast, I’m expecting some correctional movement to 1.0572 against Friday’s rally. The trend line from 02/02/17 has been broken on the daily timeframe. The market share for buyers has surpassed that of sellers. If short positions on the euro continue to increase, the single currency will move towards 1.0650.

Day’s news (GMT+3):

EURUSD rate on the hourly. Source: TradingView

Intraday forecast: low: 1.0572, high: 1.0622 (current in Asia), close: 1.0585.

On Friday, the target I set was reached. I didn’t even try to predict the fluctuations that would follow Yellen’s speech. Given that FOMC members had prepared the market for a rate hike before Yellen’s speech, after she had spoken, the selling of short positions intensified.