The euro opened at 1.3677 (8:00 am ET) at the top of the 1.3640-83 Asian and European range in front of the Federal Reserve Chairwoman Janet Yellen's Congressional testimony at 10:00 am.
The crosses, primarily the euro/yen had supported the euro during most of the European session and this continued for the first half hour in New York. Ms Yellen's prepared statement was released at 8:30 am and the euro promptly fell out of bed, cascading from 1.3681 just prior to 1.3630 50 minutes later. The statement was similar to the last FOMC release and said that the reductions in quantitative easing purchases would continue provided the economy improved. Ms Yellen's media reputation as an extreme dove was always exaggerated, she has consistently supported the policies of former Chairman Bernanke, including the advent of the taper in December.
The euro was already on the mend when Ms Yellen began her actual testimony about 10:10 am, reading her prepared statement first and then answering questions from Congressmen. The recovery eventually brought the euro back to 1.3680, after pausing at 1.3650. Her testimony lasted more than three hours.
A report that House Speaker John Boehner will permit a vote for a clean debt limit increase bill, that is without any other budget stipulations, propelled the return to the day's high. Stocks had been gaining since the open as the Fed's optimism on the economy outweighed the liquidity restrictions from the taper.
With US yields ratcheting higher, the 10-year gained 6 basis points to 2.73% the euro headed back down, finding support again at 1.3650, which lasted until mid-afternoon before extending lower to 1.3635 and closing at 1.3637.
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