Investing.com - The euro hit session highs against the U.S. dollar on Tuesday, as investor sentiment was bolstered by hopes that an agreement to avoid the U.S. fiscal cliff can be reached ahead of the January 1 deadline.
EUR/USD hit 1.3190 during European morning trade, the pair's highest since May 2; the pair subsequently consolidated at 1.3184, gaining 0.16%.
The pair was likely to find support at 1.3065, Friday's low and near-term resistance at 1.3187, Monday's high and a five-month peak.
Negotiations aimed at avoiding the automatic tax hikes and spending cuts, which investors fear could derail the U.S. recovery, have intensified in recent days, raising hopes that U.S. lawmakers will reach an agreement by the end of the year.
In the euro zone, Spain saw Spain saw borrowing costs decline at an auction of three- and six-month government bonds earlier Tuesday, as signs of progress in tackling the euro zone's debt crisis supported sentiment.
The euro was fractionally higher against the pound, with EUR/GBP inching up 0.06% to 0.8128 and was trading close to eight-month highs against the weaker yen, with EUR/JPY up 0.20% to 110.62.
The yen remained under broad selling pressure after an election victory for Japan's Liberal Democratic Party fuelled expectations for more aggressive monetary easing steps by the Bank of Japan.
The U.S. was to produce government data on the current account later in the trading day.
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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.
