WEEKLY REVIEW: the U.S. dollar continued to rise this week

The greenback increased further this week. The U.S. currency was supported by comments by Fed officials. Philadelphia Fed President Harker said on Wednesday that that he expected the Fed could raise its interest rate two to three times this year. St. Louis Federal Reserve President James Bullard said on Monday that low interest rates for a longer period could lead to financial instability in future.

Market participants are awaiting a speech by the Fed Chairwoman Janet Yellen later in the day. She will speak at Harvard University. Market participants hope for hints for further interest rate hikes. "Hawkish" comments will support the U.S. dollar.

I still think that it is unlikely the Fed would raise its interest rate ahead of the referendum on Britain's membership in the European Union (EU) on June 23 as Britain's exit from the EU would have a negative impact on the U.S. economy.

If the U.S. economy continues to recover from the weak first quarter, the Fed could raise its interest rate soon. But there is no significant improvement. Markit Economics' preliminary manufacturing and services purchasing managers' indexes (PMI) dropped in May. Markit Chief Economist Chris Williamson said that it seemed it was unlikely the U.S. economy would rebound in the second quarter.

Oil prices remained supported this week. Oil prices were driven by a further decline in oil output in the U.S. and by supply disruptions in Nigeria and Canada. Market participants are awaiting the OPEC meeting on June 02. But it is unlikely that the OPEC would decide to freeze or to cut its oil output.

It is likely that the currency pair EURUSD will rise toward the high of May 23 at $1.1242 or the psychological level at $1.1300, if there are negative news from the U.S. and there are no negative economic data from the Eurozone.

If the U.S. economic data is better than expected and in case of the negative economic data from the Eurozone, the currency pair EURUSD may test the psychological level at $1.1000.