The euro retreated versus the US dollar on Tuesday after ECBs Mario Draghi statement and as market players awaited the outcome of FEDs meeting on monetary policy on Wednesday.
EUR/USD pair fell to 1.3329 at 6:28 GMT, currently the session low, after which consolidation followed at 1.3338. Support was expected at June 13th low, 1.3277, while resistance was to be met at June 13th high and a four-month high, 1.3389.
US dollar fell to four-month lows against the euro and lost ground against the other major currencies last week amid growing expectations that the Federal Reserve Bank will start to unwind its bond purchases later in the year. In May FED Chairman Ben Bernanke said that the central bank could begin such tapering, if economic conditions continued to improve.
Additionally, in his statement in Jerusalim Mario Draghi said that ECB would not hesitate to deploy further non-standard monetary policy tools, beside interest rates, in its struggle to return the Euro zone to economic growth. He also stressed that some of these measures could cause unforeseeable consequences, which would need to be neutralized in an appropriate manner. Earlier on June the central bank abstained from implementing additional measures to support growth in the euro region, despite forecasts of a deepening recession later this year. This put pressure on governments in the single currency zone to introduce changes in economy and to reduce debt levels.
Meanwhile, the euro was almost unchanged against the British pound, with EUR/GBP pair up by a mere 0.02% to 0.8504.
The ZEW (Zentrum für Europäische Wirtschaftsforschung) Institute was to release its report on German economic sentiment later on Tuesday, while the US was expected to release official data, regarding Building permits, Housing starts and Consumer price index.