Forexpros – The euro held gains against the U.S. dollar on Monday, after official data showed that U.S. home sales rose less-than-expected in October, while a separate report showed that German inflation remained unchanged this month.
EUR/USD hit 1.3398 during U.S. morning trade, the pair’s highest since Thursday; the pair subsequently consolidated at 1.3357, gaining 0.91%.
The pair was likely to find support at 1.3211, Friday’s low and a seven-week low and short-term resistance at 1.3410, the high of November 24.
Germany’s Federal Statistics Office said consumer prices were flat on the month, unchanged from October and rose 2.4% on the year in November, after rising at an annualized rate of 2.5% the previous month.
Meanwhile, the GfK group said its index of German consumer climate rose unexpectedly for December, as improved employment figures and higher incomes supported the outlook.
In the U.S., the Commerce Department said that new home sales edged up 1.3% to a seasonally adjusted 307,000-unit annual rate in October, the fastest increase in five months but still short of expectations for an increase to a 312,000-unit annual rate.
The euro strengthened broadly earlier amid speculation that European Union leaders may be able to reach an agreement on a deal to halt the spread of the region’s debt crisis.
The deal would make budget discipline enforceable by European authorities and would give the European Central Bank more scope to undertake large scale bond purchases.
Belgium paid record yields at an auction of government debt earlier in the day, but sold the maximum targeted amount of EUR2 billion of bonds in the country’s first debt sale since Standard & Poor’s downgraded the country’s rating by one notch on Friday.
The euro was also higher against the pound, with EUR/GBP rising 0.30% to hit 0.8599.
Also Monday, the Organization for Economic Cooperation and Development said the euro zone has entered a mild recession and represents the main risk to the world economy at present.
The OECD also urged the ECB to act more decisively to prevent the region’s debt crisis from deepening further.
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