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The US dollar weakened on Tuesday as the sterling and euro jumped after some opinion polls suggested that Britain could vote to stay in the European Union at the referendum this week, along with cautious sentiment ahead of Federal Reserve Chair Janet Yellen’s testimony on Wednesday.
The polls on Monday indicated that the support for Britain to remain in the EU had recovered after the killing of lawmaker Jo Cox. According to Betfair, the number of people voting for the so-called “Bremain” rose to around 78% after hitting 60% last Thursday.
The dollar also stayed in defensive mode before the testimony of Janet Yellen, which could trigger global financial market volatility. The testimony comes against the background of the US economy and Fed having disappointed dollar investors time after time. In particular, U.S. nonfarm payrolls data reported only 38,000 jobs created in May, falling well below the 162,000 expectation, casting doubts on the economic recovery. Moreover, the central bank decided not to raise interest rates at the policy meeting held on June 15-16, along with cutting its forecast for the US economic growth in 2016 to 2%.
Yellen will testify before lawmakers after the Fed left the interest rate unchanged last week, citing a potential Brexit as a factor contributing to its decision. According to traders and analysts, the currently dovish tone of the Fed has the potential to weaken the dollar further, in the coming weeks.
The dollar index lost 0.7 percent to 93.568 compared with the last settlement, the lowest level since June 9. Against the dollar, the euro gained 0.6 percent to $1.1340.
Fig. EURUSD D1 Technical Chart
EURUSD is on track to rise as high as 1.14613 with RSI lingering at 55 and heading towards overbought territory. The trend indicator is suggesting long positions as the green arrow appeared below the price movement, which has crossed above the 50-day moving average. The pair is likely to continue the up-move, and hit the resistance level at 1.14613.
Buy Digital Call Option from 1.13315 to 1.14613 valid until 20:00 June 24, 2016