Forexpros – The euro traded flat against the dollar on Tuesday as investors huddled on the sidelines to wait and see if the Federal Reserve or European Central Bank will hint at stimulus measures at their respective monetary policy meetings this week.
In Asian trading on Tuesday, EUR/USD was trading flat at 1.2260, up from a low of 1.2260 and off from a high of 1.2261.
The pair was likely to find support at 1.2118, the low of July 26, and resistance at 1.2390, the high from July 27.
The European Central Bank and the Federal Reserve are due to address interest rates this week and the market is eager to see some indication in their announcements as to whether their respective economies merit stimulus measures.
Talk has been growing the Fed may roll out a third round of quantitative easing to spur U.S. recovery while the ECB may uncover similar tools to lower borrowing costs and push the European economy towards growth.
Later this week, the eurozone will release unemployment figures while the U.S. will do so as well, which further kept the market on edge and trading quiet but tense.
Meanwhile in Europe, the yield on the Italian 10-year note fell below 6% for the first time since April, signifying investors are viewing Italian government debt as a less risky venue.
In Spain, where yields on the 10-year government note soared above 7.70% recently, the government announced the economy contracted 0.4% on year in the second quarter, meaning the country remains firmly locked in recession.
The European Commission’s index of economic sentiment across the eurozone dropped to 87.9 in July compared with 89.9 in June.
Analysts were expecting a reading of 88.7.
The euro, meanwhile, was down slightly against the pound and down against the yen, with EUR/GBP down 0.01% at 0.7803, and EUR/JPY trading down 0.09% at 95.75.
All eyes will focus on the Federal Reserve and the ECB on Tuesday.
Elsewhere, he eurozone will release its unemployment rate as well as preliminary data on consumer price inflation.
Germany, meanwhile, will retail sales figures and its unemployment change, while France will unveil consumer spending data.
The U.S. will release data on personal consumption expenditures price inflation, as well as on employment costs and personal spending.
The Standard & Poor’s / Case-Shiller house price inflation report, followed by Chicago’s purchasing managers’ index and industry data on consumer confidence will hit the wire.
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