Forexpros – The euro strengthened against the dollar on Wednesday, after the greenback took a breather from the healthy gains it took as fears sprouted of a Chinese slowdown.
In Asian trading on Wednesday, EUR/USD hit 1.3233, up 0.06%, up from a session low of 1.3221 and off from a high of 1.3238.
The range bound pair was likely to test support at 1.3173, Tuesday’s low, and resistance at 1.3253, Tuesday’s high.
The dollar shot up in U.S. and European sessions after global mining giant BHP Billiton warned that China’s demand for iron ore would remain flat through 2020, which fueled fears the global economy may be slowing.
Back in the U.S. the Commerce Department reported housing starts fell in February but added the number of building permits issued rose to its highest level since October 2008.
U.S. housing starts fell 1.1% in February to a seasonally adjusted 0.70 million from a revised 0.71 million units in January, largely in line with expectations.
Building permits rose to a seasonally adjusted 0.72 million, above expectations for a gain to 0.68 million.
Federal Reserve Chairman Ben Bernanke earlier said the U.S. remains cushioned from Europe but added the Federal Reserve would act to protect the economy if needed, although he made no reference to specific policy tools such as quantitative easing.
The greenback did face some headwinds, mainly on rising U.S. Treasury yields, the product of growing consensus that the U.S. economy is improving, which makes riskier assets like stocks more appealing but also stokes inflationary fears.
The euro, meanwhile, was up against the pound and up against the yen, with EUR/GBP trading up 0.08% at 0.8342 and EUR/JPY up 0.03% at 110.74.
Later Wednesday in the U.K., the Bank of England is to publish the minutes of its March monetary policy meeting, which will give investors more insight into the health of the economy.
The U.K. is also to publish official data on public sector borrowing, while the government’s annual budget document is to be presented to lawmakers.
Also Wednesday, the U.S. is to release data on existing home sales, a leading indicator of economic health, as well as official data on crude oil stockpiles.
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