Investing.com -- EUR/USD rose moderately on Thursday, extending slight gains from the previous session, as foreign exchange traders awaited comments from Janet Yellen for possible signs of whether the Federal Reserve could tighten its monetary policy cycle next while the European Central Bank maintains an unorthodox negative interest rate policy.
The currency pair traded between 1.1155 and 1.1217, before settling at 1.1193, up 0.0038 or 0.34% for the session. Despite the brief gains over the last two sessions, the euro is still in the midst of one of its driest spells on the calendar year. Since hitting nine-months in early-May, EUR/USD has fallen considerably by nearly 3%.
EUR/USD likely gained support at 1.1055, the low from March 15 and was met with resistance at 1.1434, the high from May 12.
On Thursday morning, the U.S. Labor Department said initial jobless claims fell by 10,000 for the week ended on May 20 to 268,000, slightly below analysts' expectations of 275,000. At the same time, the four-week average ticked up by 3,000 to 278,500, reflecting three previous weeks of considerable gains. The rising four-week average could provide an ominous harbinger for the labor market heading into next week's critical May jobs' report, the last before the Federal Open Market Committee meets on June 14-June 15.
Yellen will make her first public appearance in nearly two months at a ceremony when she receives the Radcliffe Medal from Harvard University's Radcliffe Institute for Advanced Study on Friday afternoon. Yellen could provide further hints on the pace of the Fed's long-term rate path in a Question-And-Answer session with Harvard economics professor Gregory Mankiw after the presentation. Over the last two months, Yellen has reiterated that the Fed will raise rates gradually in the current cycle, amid widespread volatility in global financial markets and persistently low inflation.
Two other Federal Open Market Committee (FOMC) policymakers, St. Louis Fed president James Bullard and Fed governor Jerome Powell, sent indications on Thursday that the Fed could raise rates shortly. The FOMC has left its benchmark Fed Funds Rate at a targeted range between 0.25 and 0.50% in each of its three meetings this year since its historic rate hike last December. At an appearance Thursday at the Peterson Institute for International Economics, Powell admitted the prospects of a Brexit by the U.K. from the European Union in a June 23 referendum could cause the Fed to exercise caution when deciding on whether to raise rates.
Elsewhere, Spain's economy grew by 3.4% on an annual basis in the first quarter, the country's statistics agency said Thursday. Spanish GDP also increased by 0.8% from the fourth quarter of last year, according to the Spanish government. Both readings were in line with consensus estimates.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.30% to an intraday low of 94.93 before settling at 95.14. The index is down by more than 4% since early-December. Any rate hikes by the Fed this year are viewed as bullish for the dollar as foreign investors pile into the greenback in order to capitalize on higher yields.
Yields on the U.S. 10-Year dropped four basis points to 1.83%, while yields on the Germany 10-Year inched down one basis point to 0.14%. Yields on U.S. and Germany 10-year bonds are both down more than 30 basis points over the last year.