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Forex - EUR/USD gains as expectations grow for Fed to stay loose

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Investing.com - " The dollar slumped against the euro on Friday amid growing expectations for the Federal Reserve to keep its monthly bond-purchasing program in place to offset any drag the recent fiscal showdown in Washington may have on recovery.

In U.S. trading on Thursday, EUR/USD was up 0.08% at 1.3687, up from a session low of 1.3660 and off from a high of 1.3703.

The pair was likely to find support at 1.3474, Wednesday's low, and resistance at 1.3711, the high from Feb. 1.

While markets breathed a sigh of relief after the U.S. Congress passed a bill to reopen the government and raise the debt ceiling this week, concerns continued to persist that the Federal Reserve may delay plans to taper its stimulus program until early 2014.

The Fed is currently buying USD85 billion in Treasury holdings and mortgage debt a month to boost the economy, a monetary policy tool known as quantitative easing that drives down interest rates to spur recovery, weakening the dollar in the process.

Prior to the fiscal showdown in Washington, markets were expecting the Fed to begin tapering the pace of its asset purchases in late October or early December, though many have pushed back estimates for a start date to early 2014, possibly after current Fed Chair Ben Bernanke steps down on Jan. 31.

Separately, investors ditched the safe-haven greenback for risk-on asset classes after official data showed that China's 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.

Elsewhere, the euro was up against the pound and down against the yen, with EUR/GBP trading up 0.02% at 0.8462 and EUR/JPY trading down 0.06% at 133.84.

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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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