In U.S. trading on Tuesday, EUR/USD was down 0.08% at 1.3053 and jumping in and out of positive territory, up from a session low of 1.3018 and off from a high of 1.3121. The pair was likely to find support at 1.2999, the low from Jan. 4, and resistance at 1.3318, Monday’s high. The euro continued to see pressure on fears that inconclusive Italian election results could stall or even dismantle economic reforms, which could reignite the eurozone’s debt crisis. While the country’s center-left coalition, led by the Democratic Party, won the majority of votes in the lower house and will likely form a government, a deadlock resulted in the Senate vote, though markets began to breathe easier on Tuesday, which gave the euro room to rise.
The Conference Board reported earlier that its consumer confidence index jumped to a three-month high in February, hitting 69.6 from 58.4 in January, beating expectations for a 61.0 reading. The Commerce Department reported earlier that new home sales jumped 15.6% to 437,000 units in January, beating out market calls for an increase to 381,000. January’s sales hit their highest level since May of 2010. Home prices are on the rise as well. The Standard & Poor’s/Case-Shiller home price index rose at an annualized rate of 6.8% in December, above expectations for a 6.6% increase. On a month-on-month basis, U.S. home prices rose 0.9% in December, beating out expectations for a 0.7% increase after rising by 0.6% in the preceding month.
Federal Reserve Chairman Ben Bernanke told the Senate Banking Committee that loose monetary policies, including a USD85 billion monthly bond-buying program, haven’t fueled inflationary pressures or asset bubbles in the country’s markets. “Although a long period of low rates could encourage excessive risk-taking, and continued close attention to such developments is certainly warranted, to this point we do not see the potential costs of the increased risk-taking in some financial markets as outweighing the benefits of promoting a stronger economic recovery and more-rapid job creation,” Bernanke said, according to prepared remarks of his testimony.
The euro, meanwhile, was up against the pound and down against the yen, with EUR/GBP trading up 0.06% at 0.8620, and EUR/JPY trading down 0.57% at 119.23.
On Wednesday, the eurozone will unveil official data on M3 money supply, as well as the Gfk report on German consumer climate. Italy is to hold an auction of 10-year government bonds. The U.S. will release official data on durable goods orders, pending home sales and crude oil inventories. Meanwhile, Fed Chairman Ben Bernanke is to testify on monetary policy before the House Financial Services Committee.
EasyForexNews Research Team