EUR / USD erases 1.14 as ECB purchase program launches corporate bonds

Investing.com - EUR / USD extended its recent gains clear briefly 1,14 for the first time in three weeks, as the European Central Bank launched a comprehensive program of buying corporate bonds on Wednesday.The currency pair traded in a narrow range between 1.1355 and 1.1410 before settling at 1.1396, up 0.0039 or 0.33%. With slight gains, the euro posted its third consecutive victory against the dollar and the fifth in the last seven sessions. From dipping below 1.11 in late May, the euro has risen by more than 2.3% against its US counterpart during the last week.EUR / USD probably won support at 1.1055, the low of March 15 and met with resistance at 1.1616, the high of May 3.In the euro zone, yields on corporate bonds moved lower as the ECB launched a program of asset purchases of the highly anticipated business sector, in its latest attempt to avoid deflation. The bonds are limited to investment grade securities, according to the ECB, which are denominated in euros and issued in the euro zone. It is estimated that the market for these bonds is around € 500 and € 600 billion, consisting mainly of debt of major companies in France and the Netherlands.Also Wednesday, the ECB Governing Council François Villeroy de Galhau outlined the potential ramifications of reducing interest rates deeper into negative territory. In March, the ECB cut its deposit rate further by charging banks to hold 0.4% overnight cash. Last week, the ECB kept its benchmark interest rate a record low of zero."Not all unconventional instruments are legitimate. There are limits on the negative that interest rates can go," Villeroy de Galhau said during an appearance in Berlin. "This type of unconventional measures, while useful, should be used with care."Yields on 10-year Germany remained stable at 0.05%, while yields on US 10 years fell one basis point to 1.70%. On Tuesday, yields on German bonds fell to a record low of all time 0.04%.Elsewhere, the US Labor Department said in their monthly job openings and labor turnover survey, or shaking the hiring rate fell to 3.5% in April, from 3.7% in March. the lowest level since August 2014 marked the same time, job openings across the country increased by 118,000 to 5.79 million dollars, the highest amount in 11 months seasonally adjusted. The rate of job openings increased slightly by 0.1 to 3.9%.Subject recruitment figures come on the heels of a monthly US jobs report lousy last week when the Labor Department reported that the economy added 38,000 in May, the fewest monthly job positions in nearly six years. The pessimistic report provides an unexpected shock to the labor market, adding an average of 200,000 jobs per month last year - one of the highest annual total since the Great Recession. On Monday, the president of the Federal Reserve, Janet Yellen, tried to calm markets by minimizing the importance of a single report.Yellen's comments, however, have done little to convince market players that the Fed could resume tightening in the coming months. The chances of a rate hike in July, the CME Group (NASDAQ: CME) Fedwatch tool, stood at 24.8% on Wednesday, compared with 30.0% the previous month. The market also is virtually no chance of a rate hike next week when the FOMC meets for two-day meeting next week. The current probability of a rate hike in June fell to 1.9% on Tuesday from 3.8% during the previous day.Any rate increases by the Fed this year are seen as bullish for the dollar as foreign investors accumulate in the greenback in order to take advantage of higher yields.The US dollar index, which measures the strength of the greenback versus a basket of six major currencies, fell more than 0.35% to an intraday low of 93.41 to 93.59 before recovering to close operations the US afternoon .. the index has fallen by more than 5% since early December.