Forexpros – The euro extended gains against the U.S. dollar on Tuesday, climbing to a fresh session high as sentiment on the greenback was hit by speculation that the Federal Reserve may announce a third round of monetary stimulus.

EUR/USD hit 1.2664 during U.S. morning trade, the session high; the pair subsequently consolidated at 1.2661, gaining 0.68%.

The pair was likely to find support at 1.2541, the low of June 14 and resistance at 1.2746, Monday’s high and a one-month high.

The U.S. central bank was to begin its two-day policy meeting later Tuesday, amid growing expectations that policymakers may announce fresh stimulus measures after a recent string of weak economic data.

Earlier Tuesday, official data showed that number of building permits issued in the U.S. rose more-than-expected in May, rising 7.9% to 0.780 million, the highest level since September 2008, blowing past expectations for a gain of 1% to 0.728 million.

However, U.S. housing starts fell to 0.708 million in May, compared to expectations for a decline to 0.720 million.

In the euro zone, the yield on Spanish 10-year bonds eased back from session highs but remained above the critical 7% threshold amid concerns that a EUR100 billion bailout agreed earlier this month may not be enough to secure the country’s troubled banking system.

Madrid saw short-term borrowing costs rise to euro-era highs at an auction of government bonds earlier Tuesday.

Elsewhere, a report showed that the ZEW index of economic sentiment in Germany tumbled in June, amid concerns over political instability in Greece and worries over sovereign debt contagion.

Meanwhile, investors remained hopeful that Greece’s New Democracy party would form a coalition government with the socialist Pasok party, which would allow Athens to resume negotiations with creditors on its international bailout deal.

The euro also extended gains against the pound and the yen, with EUR/GBP gaining 0.44% to hit 0.8062 and EUR/JPY advancing 0.59% to hit 100.07.

Also Tuesday, leaders from the Group of 20 nations were holding a second day of talks in Los Cabos, Mexico.