Forex Pros – The euro pared losses against the U.S. dollar on Tuesday, retreating from a four-day low after hawkish comments from European Central Bank official Yves Mersch, however ongoing tensions in the Middle East and North Africa continued to weigh.
EUR/USD hit 1.3524 during European morning trade, the pair’s lowest since February 16; the pair subsequently consolidated at 1.3633, shedding 0.31%.
The pair was likely to find support at 1.3461, the low of February 16 and resistance at 1.3714, Monday’s high.
The euro found support after ECB council member Yves Mersch said officials may toughen their language on inflation when ECB policy members meet next week, indicating a readiness to raise interest rates in coming months.
With the economy strengthening and inflation in breach of the ECB’s 2% limit, policy makers would “inevitably†have to “rebalance our monetary policy stance,†Mersch said, without giving a timeframe.
Meanwhile, in Libya, violent clashes between police and protesters spread to Tripoli as the nation’s long ruling leader, Muammar Qaddafi appeared to lose control of some eastern parts of the country to anti-regime forces, The Wall Street Journal reported.
Elsewhere, the euro was up against the pound, with EUR/GBP edging higher 0.02% to hit 0.8432.
Earlier in the day, market research group Gfk said its index of Germany’s consumer climate advanced to 6.0 in March, after rising to a revised 5.8 in February. Analysts had expected the index to remain unchanged at 5.8 in March.
Meanwhile, the U.S. was to publish data on consumer confidence compiled by the Conference Board as well as industry data on house prices and a report on manufacturing activity in Richmond.
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