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Forex - Euro up against U.S. dollar as Fed FOMC decision eyed

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Forexpros - The euro extended gains against the U.S. dollar on Tuesday, recouping some of the previous day's sharp losses, as the greenback was weighed by prospects of further monetary easing by the Federal Reserve.

EUR/USD hit 1.4287 during U.S. morning trade, the daily high; the pair subsequently consolidated at 1.4252, gaining 0.51%.

The pair was likely to find support at 1.4054, the low of August 5 and a two-week low and resistance at 1.4425, Monday's high.

Investors awaited a Federal Reserve statement on monetary policy due later in the day, which could provide hints regarding further easing measures.

With financial markets in turmoil, expectations grew that the central bank would introduce further easing to calm investors and stimulate growth in the world's largest economy after it completed a USD600 billion Treasury bond-buying program known as Quantitative Easing 2 on June 30.

At its June meeting, the Fed reiterated that interest rates would be "exceptionally low" for an "extended period" and said the policy of reinvesting maturing securities to keep the balance sheet steady would be maintained for an unspecified period.

Meanwhile, the U.S. Bureau of Labor Statistics said earlier that non-farm business sector labor productivity declined by a seasonally adjusted 0.3% in the second quarter, better than expectations for a 0.9% decline.

The previous quarter's figure was revised down to a 0.6% drop from a previously reported 1.8% gain

The report also said unit labor costs rose by a seasonally adjusted 2.2% in the second quarter, broadly in line with expectations. The previous quarter's figure was revised higher to 4.8% from a 0.7% increase.

The euro was also up against the pound, with EUR/GBP climbing 0.73% to hit 0.8752.

Earlier in the day, government data showed that Germany's trade surplus narrowed in line with expectations to EUR11.5 billion in June, down from May's surplus of EUR12.9 billion.

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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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