Forexpros – The euro traded higher against the dollar on Thursday, erasing earlier losses after the Federal Reserve said in a monetary policy statement it had no immediate plans to stimulate the U.S. economy with easing tools.
In Asian trading on Thursday, EUR/USD was trading up 0.05% at 1.2232 in choppy trading, up from a low of 1.2224 and off from a high of 1.2238.
The pair was likely to find support at 1.2118, the low of July 26, and resistance at 1.2306, the high from July 30.
The U.S. economy continues to grow though its pace of recovery appears to be cooling.
“Growth in employment has been slow in recent months, and the unemployment rate remains elevated. Business fixed investment has continued to advance. Household spending has been rising at a somewhat slower pace than earlier in the year,” the Federal Open Market Committee (FOMC), the Fed’s monetary policy body, said in a statement.
“Despite some further signs of improvement, the housing sector remains depressed. Inflation has declined since earlier this year, mainly reflecting lower prices of crude oil and gasoline, and longer-term inflation expectations have remained stable.”
The Fed said under such a scenario it saw no need to change its benchmark interest rate, the fed funds target, which stays at 0.25%.
The Fed added economic conditions meriting loose policies will likely stick around through the end of 2014.
However, the U.S. central bank remains on standby with no plans to jolt the economy via quantitative easing, which are bond purchases from banks that flood the economy with liquidity, weakening the dollar in the process to spur recovery.
“The Committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability,” the Fed added.
While many investors feel Fed intervention may come in September, when the FOMC meets again, a decision to stand down earlier sent the dollar gaining and the euro falling, before profit-taking sent the euro back up in early Asian trading.
The U.S. will release its July jobs report on Friday and investors were already looking past the Fed’s statement.
U.S. payroll processor ADP reported earlier that the private-sector increased headcount by a seasonally adjusted 163,000 in July, beating expectations for an increase of 120,000.
June’s figure was revised down to 172,000, slightly lower that the initial estimate of 176,000.
The ADP figure serves as a weather vane for the official number.
The euro, meanwhile, was up slightly against the pound and down against the yen, with EUR/GBP up 0.01% at 0.7871, and EUR/JPY trading down 0.03% at 95.86.
The pair will focus on the European Central Bank later Thursday, which will announce its decision on interest rates and monetary policy.
Later Thursday, U.S. is to release government data on initial jobless claims and factory orders, a leading indicator of production.
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