© Paul Rosenberg
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Not only did the worst NFP figure since September 2010 send rate hike expectations to virtually zero for June, but Yellen further diminished expectations for a rate hike in the immediate future in her speech on Monday. At this time, December is looking like the next likely window of opportunity for the Fed to raise rates, but a lot can happen between now and then. The US dollar should remain under pressure in the short-term (1-2 weeks) and the case is building for broad Dollar weakness to persist for the next several months or longer.
What should a trader focus on this summer in order to successfully trade the US Dollar and where could we see EUR/USD by the end of June?
With the Fed side-lined for the foreseeable future and the ECB in 'wait-and-see' mode, a convergence in monetary policy is in progress. This provides a favorable backdrop for the Euro over the coming weeks. On a technical note, the EUR/USD held a trend-line off the December low just prior to the burst higher on the poor US jobs report. The upward trend off that important low coupled with the convergence dynamic previously mentioned suggests an advance to $1.17/18 in the next few weeks.