Forex - EUR/USD dips ahead of Fed statement, U.S. data support


Shutterstock photo - The euro edged lower against the dollar on Wednesday in steady trading as investors remained in standby mode ahead of the release of the Federal Reserve's statement on monetary policy and the fate of its USD85 billion monthly bond purchases.

Better-than-expected data out of the U.S. housing sector gave the dollar room to rise in the meantime.

In U.S. trading on Wednesday, EUR/USD was down 0.05% at 1.3760, up from a session low of 1.3732 and off from a high of 1.3778.

The pair was likely to find support at 1.3723, Tuesday's low, and resistance at 1.3782, Tuesday's high.

The Census Bureau reported earlier that U.S. housing starts rose to 1.09 million units in November from 890,000 in October, beating consensus forecasts for an increase to 950,000 units.

Building permits in the U.S. fell 3.1% to 1.01 million units in November, from 1.04 million units the previous month.

Still, analysts were expecting building permits to drop 4.7% last month.

The dollar inched up, though gains were limited ahead of the Federal Reserve's announcement on monetary policy, especially on its plans to taper or let stand its USD85 billion in monthly bond purchases.

The Fed's monthly asset-purchasing program, now 15 months old, aims to spur recovery by driving down interest rates, weakening the dollar in the process.

The euro showed little reaction after the Ifo German business climate index rose to a 20-month high of 109.5 in December, in line with forecasts and up from 109.3 in November.

The single currency was down against the pound and up against the yen, with EUR/GBP trading down 0.82% at 0.8396 and EUR/JPY trading up 0.44% at 141.97.

The pound shot up after data revealed that the U.K. unemployment rate unexpectedly fell to a four-and-a-half year low of 7.4% in the three months to October, fueling hopes that the Bank of England will raise interest rates ahead of other central banks.

Analysts were expecting a 7.6% reading.

On Thursday, the U.S. is to publish data on existing home sales, manufacturing activity in the Philadelphia region and initial jobless claims.

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This article appears in: Investing Forex and Currencies
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