Forexpros – The euro erased losses against the U.S. dollar on Wednesday, after the People’s Bank of China announced that it will cut banks reserve requirement ratios but the single currency’s gains were capped amid concerns over the deepening debt crisis in the region.
EUR/USD pulled back from 1.3260, the pair’s lowest since November 25, to hit 1.3331 during European late morning trade, inching up 0.13%.
The pair was likely to find support at 1.3211, the low of November 25 and a seven-week low and short-term resistance at 1.3357, the days high.
The PBOC announced that it plans to cut banks’ reserve requirement ratios by 0.5% in an effort to help boost liquidity and support the world’s second largest economy amid global market turmoil.
But the euro remained under pressure as the region’s finance ministers prepared to meet for a second day of talks, after agreeing on measures to expand the bloc’s bailout fund on Tuesday.
European Union Economic and Monetary Affairs Commissioner Olli Rehn said that the region now faces a crucial 10 days to save the single currency bloc.
Earlier in the day, official data showed that the rate of consumer price inflation in the single currency bloc remained unchanged at 3% for the third straight month in November, indicating that the European Central Bank may have to hold off on rate cuts in the coming months.
A separate report showed that unemployment in the euro zone ticked up to 10.3% last month from 10.2% in September.
Elsewhere, the euro was fractionally lower against the pound, with EUR/GBP dipping 0.10% to hit 0.8527.
Later in the day, the U.S. was to release a closely watched report on non-farm payrolls compiled by payroll processing firm ADP, as well as reports on manufacturing activity in the Chicago area and pending home sales.
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