Forex - EUR/USD holds lower as Fed outlook supports greenback

Shutterstock photo
Shutterstock photo

Shutterstock photo - - The euro traded lower against a firming dollar on Wednesday amid building expectations that the Federal Reserve will close its bond-buying program in or around October and raise interest rates in mid-2015.

In U.S. trading, EUR/USD was down 0.17% at 1.2917, up from a session low of 1.2897 and off a high of 1.2962.

The pair was likely to find support at 1.2858, Tuesday's low, and resistance at 1.2962, Monday's high.

In a session void of major economic indicators, the dollar found support on expectations that U.S. retail sales and consumer-sentiment reports will come in solid this Friday, while the Federal Reserve will conclude a two-day policy meeting next week winding down asset purchases and moving closer to hiking benchmark interest rates.

A Federal Reserve Bank of San Francisco report published on Monday suggested rate hikes may come sooner than markets may be expecting.

The Fed is widely seen cutting its monthly bond-buying program by $10 billion to $15 billion at its Sept. 16-17 meeting before possibly closing it in October.

Many market participants are hoping the U.S. central bank's statement on monetary policy next week will hint at when rates may rise.

Despite disappointments here and there, U.S. economic indicators collectively point to a recovery that is gaining steam.

The euro, meanwhile, continued to come under pressure in wake of a European Central Bank decision to trim interest rates and roll out an asset-backed securities purchasing program.

Elsewhere, the euro was down against the pound, with EUR/GBP down 0.44% at 0.7999, and up against the yen, with EUR/JPY up 0.23% at 137.72.

On Thursday, the U.S. is to produce its weekly report on initial jobless claims.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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