The euro touched one-week low against the US dollar, after the Federal Reserve Bank announced that it will scale back its monetary stimulus by $10 billion at its two-day policy meeting concluded yesterday.
EUR/USD touched a session low at 1.3597 at 09:30 GMT, after which consolidation followed at 1.3608, losing 0.41% for the day. Support was likely to be received at January 23rd low, 1.3529, while resistance was to be met at January 29th high, 1.3685.
On Wednesday, the Federal Open Market Committee announced that it will reduce the pace of its monthly bond purchases to $65 billion from the current $75 billion. The FOMC cited improvements in the labor market and the pace of the economic growth, which started accelerating in recent quarters, in consonance with its plan to gradually withdraw from bank’s unprecedented accommodative policy. The central bank has undertaken three rounds of bond purchases since 2008, known as quantitative-easing stimulus strategy.
The Fed also maintained its benchmark interest rate unchanged at 0.00%-0.25% in line with expectations.
The central bank will probably continue to pare stimulus by $10 billion at each policy meeting before exiting the program in December, according to a Bloomberg News survey of 41 economists, conducted on January 10th.
At the same time, US preliminary Gross Domestic Product probably increased at an annualized rate of 3.2% during the fourth quarter of 2013, according to the median estimate of economists, following the 4.1% gain recorded in Q3. The official figure is scheduled to be released at 13:30 GMT today. Better than anticipated result will certainly heighten the appeal of the US dollar.
Personal consumption expenditures in the United States probably rose at an annualized pace of 3.7% in Q4, after gaining 2.0% in the preceding quarter.
Meanwhile, the euro was supported after a report by the German Federal Statistical Office (Destatis) showed the unemployment rate in the largest economy in the euro area, Germany, remained unchanged at 6.8% in January, after Decembers reading was downward revised to 6.8% from earlier estimates of 6.9%. Analysts had expected the jobless rate will come at 6.9% this month.
A separate report revealed the number of people filing for unemployment benefits in Germany declined by 28 000 in January, the most since January 2013. Analysts had predicted that the number of people who file for jobless benefits will decrease by 5 000 this month.
Later today, data may show that the preliminary consumer price index and harmonized consumer price index in Germany increased their annual pace in January. Higher-than-expected readings will heighten the appeal for the common currency.
Elsewhere, AUD/USD touched a daily low at 0.8711 at 1:45 GMT, also the pair’s lowest point since July 20th 2010, after which consolidation followed at 0.8728, down 0.13% for the day. Support was likely to be found at July 20th 2010 low, 0.8684, while resistance was to be encountered at January 29th high, 0.8826.