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Forex - EUR/USD near 4-month lows after Cyprus rejects bank tax

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Investing.com - The euro eased against the dollar on Wednesday but remained close to four-month lows after Cyprus's parliament overwhelmingly rejected a proposed bank deposit tax, which formed part of a EUR10 billion international bailout deal.

EUR/USD hit 1.2906 during late Asian trade, the session high; the pair subsequently consolidated at 1.2899, easing up 0.14%.

The pair was likely to find support at 1.2842, Tuesday's low and a four-month low and resistance at 1.2969, Tuesday's high.

Cyprus's President Nicos Anastasiades called an emergency meeting with political leaders to look at alternatives after parliament rejected the terms of the bailout agreement.

Following the vote, the European Central Bank said it will provide liquidity to Cypriot banks within existing rules.

German Finance Minister Wolfgang Schaeuble warned Cyprus that its banks might never be able to reopen if it rejected the bailout.

The euro found some support amid growing expectations that the European Union will renegotiate a deal with Cyprus to keep the country in the euro zone.

Elsewhere, the euro pushed higher against the pound and the yen, with EUR/GBP easing up 0.12% to 0.8544 and EUR/JPY rising 0.24% to 122.88.

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.

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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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