Euro/dollar opened the US session at 1.2936 and initially traded lower to 1.2916 on general dollar demand accentuated by dollar/yen breaking 103.00. However, ahead of Bernanke's Congressional testimony at 10:00 am ET the rate had recovered comfortably back within its range to 1.2945.
Bernanke's prepared text was taken as dovish with focus on comment that "a premature tightening would be a risk to the recovery," driving the euro to a high of 1.2998 and Treasury yields four basis points lower.
However this proved to be the opportunity that traders were looking for to buy dollars at better levels and even before the Q&A session the euro had retraced to 1.2950. The dollar was then marked higher across the board on comments from Bernanke that the Fed could start tapering in next few months. The credit market jumped all over this and yields soared as much as 15 basis points taking eur/usd to a low to 1.2843. Despite a couple of subsequent rallies to 1.2870 the euro had an offered tone with sellers in eur/yen forcing a session low to 1.2834 with good bids at 1.2840 slowing the move.
Market News International