Forex - EUR/USD off 4-month lows but upside seen limited

Shutterstock photo - The euro rebounded from four-month lows against the dollar on Wednesday, buoyed hopes that a solution on a bailout deal for Cyprus would be found, but gains looked likely to be limited as sentiment on the single currency remained fragile.

EUR/USD hit 1.2956 during European afternoon trade, the session high; the pair subsequently consolidated at 1.2951, gaining 0.52%.

The pair was likely to find support at 1.2842, Tuesday's low and a four-month low and resistance at 1.2994, Monday's high.

In Cyprus, the government was holding talks aimed at finding an alternative solution after the parliament rejected a proposed bank deposit tax, a condition of a EUR10 billion international bailout deal.

Meanwhile, Cyprus's Finance Minister Michalis Sarris said talks with his Russian counterpart on alternative means of financial support had been "very constructive".

The deputy head of the country's central bank said earlier that no decision had been taken on when banks, which have been shut since the weekend, would reopen.

The euro was little changed against the pound, with EUR/GBP inching up 0.02% to 0.8535, but rallied against the yen, with EUR/JPY jumping 0.87% to 123.63.

The pound came under pressure as U.K. Chancellor George Osborne began to deliver the annual budget in a statement to parliament, amid expectations that he would revise down forecasts for growth.

Earlier Wednesday, the minutes of the Bank of England's March meeting showed that policymakers remained split over more easing, while official data showed that the U.K. unemployment rate held steady February.

The BoE minutes showed that three policymakers, including Governor Mervyn King, voted in favor of more quantitative easing, unchanged from the February meeting.

Separately, the Office for National Statistics said that the U.K. claimant count fell by a seasonally adjusted 1,500 in February, compared to expectations for a decline of 5,000.

The rate of unemployment held steady at 7.8% last month, in line with expectations and unchanged from January.

Investors were looking ahead to the outcome of the Federal Reserve's policy meeting later in the trading day, after data last week showing that U.S. inflation was contained left the way clear for the bank to continue its asset purchase program. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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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.

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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