Forex - Euro hits fresh 2-1/2 year highs against dollar

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Investing.com - The euro rose to fresh two-and-a-half year highs against the dollar on Thursday as diminished expectations for more easing by the European Central Bank bolstered demand for the common currency.

EUR/USD hit 1.3966, the highest since October 31 2011, and was last up 0.35% to 1.3951.

The pair was likely to find support at 1.3895, the session low and resistance at 1.4000.

The common currency continued to gain momentum following last week's decision by the ECB to refrain from implementing policy measures to shore up growth in the euro area, despite forecasting low inflation for some years to come.

Speaking Wednesday, German Finance Minister Wolfgang Schauble said interest rates in the euro zone are too low from a German point of view. He also said he doesn't expect deflation to materialize in the euro zone.

The euro moved higher against the yen, with EUR/JPY rising 0.21% to 143.19, not far from last Friday's nine-week highs of 143.77.

The euro's gains against the yen were held in check after weaker-than-expected data from China pointed to a slowdown in the world's second-largest economy at the start of the year.

Chinese industrial production rose 8.6% on a year-over-year basis in the first two months of 2014, according to data released on Thursday, missing market expectations for an increase of 9.5%.

Retail sales figures also undershot expectations, expanding 11.8% from the same period a year earlier.

China releases economic data for the first two months of the year together, to even out distortions related to the Lunar New Year holiday.

The data comes just days after China released a report showing that exports fell sharply in February. The weak data has fuelled expectations that China's central bank could relax monetary policy to help shore up growth.

Meanwhile, investors remained wary as tensions between Russia and the West escalated ahead of Sunday's referendum in Ukraine's Crimea region, now controlled by pro-Russian forces, on whether citizens want to join Russia.

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This article appears in: Investing , Forex and Currencies

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