The euro was trading in proximity to six-month highs against the US dollar on Wednesday, as the lack of clarity, regarding Federal Reserve Banks easing program, was still present and was causing the main influence on investors decisions.
EUR/USD reached its highest point on Wednesday at 1.3426 at 2:40 GMT, after which consolidation followed at 1.3414, ticking down 0.02% on a daily basis. Support for the pair was likely to be received at August 20th low, 1.3322, while resistance was to be seen at August 20th high and a six-month high, 1.3451.
The euro was strongly supported yesterday due to the broad decline in equities worldwide, which triggered demand for the relatively safe currencies. The common currency was continuously underpinned after the release of strong GDP data out of the Euro zone last week, showing that the region has exited the 18-month recessionary period.
Meanwhile, the US dollar was put under selling pressure amid massive speculation that the Federal Reserve Bank may begin to taper its asset purchases as soon as September this year. Market players awaited the release of the minutes of Fed’s July meeting, scheduled on Wednesday, as it may provide clues on whether such action was inbound.
In addition, yesterday the ratings agency Moodys Investors Service said that it will revise up its economic outlook for the United States from negative to stable, as it was negative for the past five years. The reason behind this decision was the slowly improving economic conditions in the country. However, Moodys also added that recovery was going unevenly, as that was the main reason outlook for local states development to remain negative. Last but not least, according to experts from the ratings agency, the probability that federal expenditure cuts could harm economic growth has diminished.
Elsewhere, the euro was slightly losing ground against the pound, as EUR/GBP cross dipped 0.06% to trade at 0.8561 at 7:05 GMT. EUR/JPY pair, on the other hand, was gaining 0.12% to trade at 130.68 at 7:07 GMT.
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