Forexpros – The euro erased gains against the U.S. dollar on Wednesday, amid uncertainty over the outcome of this week’s European Union summit aimed at bringing about a resolution to the debt crisis in the euro zone.
EUR/USD pulled back from 1.3453, the pair’s highest since Monday, to hit 1.3375 during European early afternoon trade, sliding 0.20%.
The pair was likely to find support at 1.3332, Tuesday’s low and resistance at 1.3520, the high of December 1.
Sentiment on the euro was dented after the Wall Street Journal reported that an unnamed senior German official expressed pessimism on the prospect of success at the two-day EU summit, scheduled to begin Thursday.
European leaders are to discuss proposed changes to EU treaties which would allow for greater fiscal integration and stricter enforcement of budgetary discipline in the single currency bloc, clearing the way for the European Central Bank to play a bigger role in stabilizing euro zone bond markets.
European officials are also reported to be negotiating an increase in the bloc’s bailout fund, the European Financial Stability Facility and the permanent structure that will replace it, the European Stability Mechanism.
The euro shrugged off data showing that German industrial production rose 0.8% in October, beating expectations for a 0.3% increase. However, the country’s economy ministry said it expects production to remain muted in the months ahead.
The euro was also down against the pound, with EUR/GBP shedding 0.23% to hit 0.8570.
Also Wednesday, U.S. Treasury Secretary Timothy Geithner said the International Monetary Fund has a key role to play in resolving the euro zone’s debt crisis, but dismissed speculation that the Federal Reserve would lend money to the institution.
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