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Forex - Euro hits 7-1/2 month highs against weaker dollar

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Investing.com - " The euro edged up to a seven-and-a-half month high against the U.S. dollar on Friday, as investors focused on the economic impact of the U.S. government shutdown, dampening demand for the greenback.

EUR/USD hit 1.3687 during late Asian trade, the pair's highest since February 1; the pair subsequently consolidated at 1.3689, adding 0.10%.

The pair was likely to find support at 1.3581, the low of October 3 and resistance at 1.3711, the high of February 1.

The greenback came under broad selling pressure amid fears over the impact of the government shutdown on the already fragile economic recovery, which could prompt the Federal Reserve to delay plans for scaling back its stimulus program until at least the start of next year.

In addition, the possibility of another debt crisis also loomed, as the temporary debt ceiling agreement reached early Thursday does not resolve the underlying budgetary issues dividing Republicans and Democrats.

The deal will fund the government until January 15 and raise the government borrowing limit until February 7. Both sides also agreed to talks over broad budget issues in an attempt to reach a longer-term deal by December 13.

Meanwhile, market sentiment strengthened after official data showed China gross domestic product grew by 7.8% in the third quarter, in line with expectations and up from 7.5% in the three months to June.

The data eased concerns over the strength of the recovery in the world's second-largest economy.

The euro was steady against the pound with EUR/GBP dipping 0.01%, to hit 0.8459.

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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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