Forexpros – The euro extended losses against the U.S. dollar on Wednesday, as speculation that the Federal Reserve is moving away from implementing fresh stimulus measures bolstered demand for the greenback.
EUR/USD hit 1.3020 during U.S. morning trade, the pair’s lowest since February 16; the pair subsequently consolidated at 1.3027, shedding 0.42%.
The pair was likely to find support at 1.2974, the low of February 16 and resistance at 1.3089, the session high.
Investors trimmed back expectations for a fresh round of monetary easing after the Fed upgraded its outlook for the economy in its rate statement on Tuesday.
The Fed said it now expects to see “moderate economic growth” after its January statement said growth would be “modest” and added that higher oil prices could place upward pressure on inflation.
The central bank also acknowledged the recent improvement in the labor market, saying it expected the unemployment rate to “decline gradually.”
However, policymakers reiterated their intention to keep the benchmark interest rate unchanged at a record low through late 2014 and warned that risks to the economic recovery still remained.
The outlook for the U.S. economic recovery was also bolstered after data on Tuesday showed that U.S. retail sales rose to a five-month high of 1.1% in February, coming after data last week showing that the U.S. economy added more jobs than forecast last month.
In the euro zone, a report earlier showed that industrial production across the region rose in January for the first time in three months, while the annualized rate of consumer price inflation was unchanged in February and remained above the European Central Bank’s target.
Eurostat said industrial production was up 0.2% in January, below expectations for an increase of 0.8%.
In a separate report, Eurostat said consumer prices rose by 0.5% last month and were up 2.7% year-over-year. The annual rate of inflation was in line with preliminary estimates, while the figure for January was revised up to 2.7% from 2.6%.
The euro was lower against the pound, with EUR/GBP shedding 0.26% to hit 0.8308, but advanced against the yen, with EUR/JPY adding 0.45% 108.99.
Also Wednesday, Eurogroup head Jean-Claude Juncker said euro zone finance ministers had formally approved the release of a second financial aid package for Greece, worth EUR130 billion.
Forexpros
