Forex - EUR/USD extends gains on Yellen comments, soft U.S. housing data
Investing.com - The euro rose against the dollar on Monday as
investors took up positions betting that the Federal Reserve will
make no changes to its USD85 billion in monthly bond purchases
until 2014 at the earliest, while soft industry housing data also
softened the greenback.
In U.S. trading on Monday, EUR/USD was up 0.17% at 1.3520, up from a session low of 1.3475 and off from a high of 1.3541.
The pair was likely to find support at 1.3298, the low from Nov. 7, and resistance at 1.3548, the high from Nov. 6.
Fed Chair Nominee Janet Yellen told the Senate Banking Committee last week that the U.S. central bank remains committed to purchasing USD85 billion in Treasury holdings and mortgage debt a month to prop up the economy, a monetary policy tool known as quantitative easing that weakens the dollar by driving down interest rates.
On Monday, the dollar remained weaker as investors waited to hear comments from other Federal Reserve officials due to appear in public this week, including New York Fed President William C. Dudley and peers Charles Plosser, head of the Philadelphia Fed branch, and Narayana Kocherlakota, head of the Minneapolis branch.
Expectations that monetary authorities will remain committed to keeping the stimulus program in place until indicators depict a more robust recovery kept the greenback soft.
Elsewhere, National Association of Home Builders/Wells Fargo Housing Market Index came in unchanged in November at 54, missing analysts' calls for an uptick to 55 this month.
Rising stock prices in the U.S. and Europe enticed many investors out of safe-haven dollar positions, which bolstered the euro's appeal in a risk-on trading session.
Meanwhile in Europe, data released earlier Monday showed that the euro zone's surplus widened to EUR13.1 billion in September from EUR8.6 billion a year earlier. The report said exports rose 3% on a year-over-year basis, while imports were flat.
The single currency was up against the pound and up against the yen, with EUR/GBP trading up 0.28% at 0.8396 and EUR/JPY trading up 0.02% at 135.25.
On Tuesday, the ZEW Institute is to release its closely watched report on German economic sentiment, a leading indicator of economic health.
The U.S. is to release data on the employment cost index, an important inflationary indicator.
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