Forex - EUR/USD off earlier lows, steadies with cautious eye on Ukraine

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Investing.com - The euro came off eight-month lows against the dollar on Wednesday and held steady after investors brushed off soft consumer sentiment data and kept a cautious eye on Ukraine.

In U.S. trading, EUR/USD was unchanged at 1.3464, up from a session low of 1.3455 and off a high of 1.3475.

The pair was likely to find support at 1.3399, the low from Nov. 21, 2013, and resistance at 1.3549, Monday's high.


Earlier Wednesday, reports that two Ukrainian jet fighters were shot down over the rebel-held city of Donetsk only days after pro-Russian separatists allegedly shot down a Malaysian Airlines flight with a missile rattled nerves.

Geopolitical concerns sparked fears that the fallout from the Ukraine conflict, which could include fresh sanctions slapped on Russia, will dampen global recovery, Europe's especially, which weakened the euro earlier.

The single currency came off earlier lows on sentiments that the U.S. could suffer as well, offsetting disappointing consumer sentiment data out of euro zone.

The European Commission reported earlier that its preliminary consumer confidence gauge fell to -8.4 in July from -7.5 in June. Analysts were expecting an unchanged reading.

Meanwhile profit taking wiped out the dollar's data-fueled gains posted against the euro on Tuesday and steadied the pair.

The Labor Department reported Tuesday that the U.S. consumer price index rose 2.1% in June, unchanged from the previous month and in line with forecasts.

On a month-over-month basis, U.S. consumer prices were up 0.3% after a 0.4% increase in May, also in line with expectations.

June's core inflation rate, which excludes food and energy costs, rose by just 0.1% from May and 1.9% on year, slightly below market calls for 0.2% and 2.0% readings, respectively, which illustrated how gasoline was driving the headline CPI up, though markets viewed the numbers as fundamentally healthy anyway.

Also on Tuesday, the National Association of Realtors reported earlier that existing U.S. home sales rose 2.6% to 5.04 million units in June from 4.91 million in May, beating market forecasts for a 2.0% rise to 4.97 million units, which also pushed the dollar up to levels ripe for profit taking.

Elsewhere, the euro was up against the pound, with EUR/GBP up 0.14% at 0.7903, and up against the yen, with EUR/JPY up 0.02% at 136.66.

In the U.K., the minutes of the Bank of England's June meeting released earlier revealed that policymakers voted unanimously to keep monetary policy unchanged last month.

The minutes also said weak wage growth in the face of strong employment growth made it difficult to gauge the degree of slack in the labor market.

On Thursday, the euro zone is to publish preliminary data on private sector activity, while Germany and France are to also to publish data on private sector growth. Meanwhile, Spain is to release its latest employment report.

The U.S. is to produce data on unemployment claims, manufacturing activity and new home sales.

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This article appears in: Investing , Forex and Currencies

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