Forexpros – The euro held onto gains against the U.S. dollar on Tuesday, after official data showed that U.S. third quarter economic growth was unexpectedly revised down and as concerns over debt levels in the U.S. and the euro zone continued to weigh on the outlook for riskier assets.
EUR/USD hit 1.3568 during U.S. morning trade, the pair’s highest since Friday; the pair subsequently consolidated at 1.3517, up 0.21%.
The pair was likely to find support at 1.3421, the low of November 17 and an almost six-week low and resistance at 1.3568, the days high.
The Commerce Department’s second estimate of third quarter gross domestic product showed that the U.S. economy grew at an annualized rate of 2%, down from a previous estimate of 2.5%.
Economists had expected the rate of growth to remain unchanged in the third quarter.
The report said the revision was due in large part to a USD8.5 billion decline in business inventories, which removed 1.55% from GDP growth. Inventories had previously been estimated to have increased by USD5.4 billion.
The euro had been higher against the greenback earlier, as risk appetite strengthened after ratings agencies indicated that the failure of a U.S. congressional committee to agree on a package of measures to slash the country’s deficit was unlikely to result in immediate downgrades on the U.S. credit rating.
Meanwhile, concerns over sovereign debt levels in the euro zone remained in focus after Spain’s Treasury sold EUR2.98 billion in three and six-month bonds in an auction earlier. Yields for the six-month bills rose to 5.2% from 3.3% at a similar auction in October.
It was the first Spanish debt auction since the conservative party’s sweeping election victory on Sunday, but investors have remained jittery as plans on how to cut the deficit and restore market confidence have remained unclear.
The euro was higher against the pound, with EUR/GBP rising 0.26% to hit 0.8646.
Later Tuesday, the U.S. Federal Reserve was to publish the minutes of its November policy meeting.
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