Investing.com -- EUR/USD fell mildly on Friday, as currency traders reacted to relatively hawkish comments from Federal Reserve chair Janet Yellen hours earlier, providing a strong likelihood that the U.S. central bank will raise short-term interest rates over the next three months.
The currency pair wavered between a range of 1.1117 and 1.1296, before settling at 1.1195, down 0.0037 or 0.33% on the session. The euro has now closed lower against the American dollar in five of the last seven sessions. For the week, the euro lost nearly 1% in value against its American counterpart.
EUR/USD likely gained support at 1.1088, the low from September 4 and was met with resistance at 1.1625, the high from Aug. 25.
Speaking at the University of Massachusetts-Amherst on Thursday evening, Yellen said conditions in the economy will likely be appropriate for the Fed to raise the target range on its benchmark Federal Funds Rate at some point in 2015. It marked the first time Yellen personally supported a 2015 rate hike since July. Yellen's stance represents a stark contrast from her position last week when the Federal Open Market Committee only disclosed that 13 of 17 of its members were in favor of raising rates this year.
The Federal Funds Rate, the rate at which banks use to lend to other institutions on overnight loans, has remained at its current "zero-bound level," since December, 2008. Nearly a decade has passed since the FOMC last hiked short-term interest rates.
Yellen also noted that the inflation shortfall is likely to be transitory, as one-off factors such as lower energy prices and weaker imports due to a stronger dollar abate. Yellen added that inflation should reach the Fed's 2% target when the labor market returns to full employment. Long-term inflation has remained under the Fed's goal for every month over the last three years.
The FOMC is expected to take a "data-driven approach," in determining whether it should wait until October or December for lift-off. On Friday, the U.S. Department of Commerce said the nation's Real Gross Domestic Product for the second quarter increased by 3.9% on an annual basis, above consensus estimates of a 3.7% gain. Real GDP measures the value of the goods and services produced by the nation's economy less the value of the goods and services used in production adjusted for inflation. The acceleration in Real GDP over the quarter reflects an uptick in export levels, the Commerce Department's Bureau of Economic Analysis said in a statement.
Separately, the University of Michigan's Consumer Survey Center said its consumer sentiment index ticked up to 87.2 for September, up from a preliminary reading of 85.7. Analysts expected a final reading of 87.1 for the month.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, gained more than 0.4% on Friday to an intraday high of 96.88. The index surged to its highest level since mid-August, before closing at 96.37, up 0.26% on the day.
Investors await the release of euro zone inflation and U.S. employment data next week for further indications on the strength of the global economy.