Forexpros – The euro was steady against the U.S. dollar on Tuesday, hovering close to a two-month low as investors eyed the outcome of the Federal Reserve’s policy meeting later in the day.
EUR/USD hit 1.3161 during U.S. morning trade, the pair’s lowest since October 4; the pair subsequently consolidated at 1.3177, dipping 0.04%.
The pair was likely to find short-term support at 1.3144, the low of October 4 and a 10-month low and resistance at 1.3351, the high of November 25.
The euro remained under pressure amid concerns over the threat of sovereign rating downgrades across the euro zone, after last week’s European Union summit failed to produce concrete plans to resolve the region’s debt crisis.
Ratings agency Moody’s said it would review ratings of all EU member states in the first quarter of 2012, while Fitch Ratings said the summit had failed to provide a “comprehensive” solution to the debt crisis.
Market sentiment remained downbeat after official data showed that U.S. retail sales increased 0.2% in November, after rising by an upwardly revised 0.6% the prior month, disappointing expectations for a 0.6% gain.
Core retail sales, which exclude automobile sales, rose 0.2% after advancing 0.6% in October. Analysts had expected core retail sales to rise by 0.5% in November.
The euro had edged higher against the dollar earlier after data showed that an index of German economic sentiment rose for the first time in ten months in December, confounding expectations for a decline but the report said perceptions of current developments remained on a downward trend.
Meanwhile, an auction of Spanish government bonds met with solid investor demand, with the Treasury surpassing the targeted amount, selling EUR4.94 billion in 12-month and 18-month bonds.
The euro was also fractionally lower against the pound, with EUR/GBP slipping 0.10% to hit 0.8451.
Later Tuesday, the Fed was to announce its federal funds rate.
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