Investing.com -- EUR/USD fell considerably extending recent losses, as fiery protests erupted in Athens on Wednesday outside Syntagma Square while Parliament debated critical measures that could seal a comprehensive third bailout from euro zone creditors.
EUR/USD traded between a low of 1.0930 on the session and a peak of 1.1036, before settling at 1.0949, down 0.55% or 0.0060. The currency pair, which has closed lower in three of the last four sessions, fell to its lowest level in more than a week. At the midway point of July, the Euro is down more than 1.65% against its American counterpart for the month.
On Wednesday night, peaceful anti-austerity demonstrations in Athens quickly spun out of control as protestors lobbed dozens of Petrol bombs and Molotov cocktails at police in riot gear, who responded by spraying tear gas in their direction in an effort to subdue unruly crowds.
Debate continued into early Thursday morning inside Parliament, as a Midnight deal imposed by creditors during Monday's landmark deal passed. The creditors required the Greek Parliament to ratify four measures related to tax, pension and budget reforms in order to trigger a vote from six other national parliaments throughout the euro zone. While Greece prime minister Alexis Tsipras will likely lose support from his leftist Syriza party after capitulating to euro zone creditors in Brussels, he is still expected to win enough votes needed to secure a three-year, EUR 86 billion bailout through the European Stability Mechanism (ESM).
On Thursday morning, euro group leaders have scheduled a conference call where they're expected to approve short-term bridge financing that could allow Greece meet billions in obligations to the European Central Bank and International Monetary Fund in the coming weeks. The leaders are waiting for Parliamentary approval of the comprehensive deal before signing off on the short-term financing.
In the U.S., the dollar surged to its highest level in a week after Federal Reserve chair Janet Yellen sent strong indications that economic conditions are likely to justify an interest rate hike at some point this year.
In prepared remarks before Congress during her semi-annual Humphrey-Hawkins testimony, Yellen reiterated that the Federal Open Market Committee will likely raise its benchmark Federal Funds Rate later this year if it continues to see improvements in the U.S economy and labor markets. The benchmark rate has remained at its current level of between zero and 0.25% since the end of the financial crisis. Meanwhile, more than eight years have passed since the Fed last instituted a rate hike.
"What matters for financial conditions and the broader economy is the entire expected path of interest rates, not any particular move, including the initial increase, in the federal funds rate," Yellen said. "Indeed, the stance of monetary policy will likely remain highly accommodative for quite some time after the first increase in the federal funds rate in order to support continued progress toward our objectives of maximum employment and 2 percent inflation."
Following Yellen's comments the FOMC is widely expected to raise the Federal Funds Rate later this year during its September or December meeting. An earlier rate increase could correlate with a more gradual long-term rate path, while a delayed rate hike might force the Fed to accelerate the rate path, Yellen added.
"The entire path of rate increases does matter," Yellen said.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six major other currencies, surged more than 0.6% to a weekly high of 97.44 before falling slightly back to 97.27.
Meanwhile, USD/CAD surged more than 1.4% to 1.2918 after the Bank of Canada unexpectedly cut its main interest rate to 0.50% on Wednesday.