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Forex - EUR/USD climbs higher after U.S. data disappoints

The euro climbed higher against the U.S. dollar on Tuesday, as the release of disappointing U.S. data dampened demand for the greenback, although losses were expected to remain limited.

The euro climbed higher against the U.S. dollar on Tuesday, as the release of disappointing U.S. data dampened demand for the greenback, although losses were expected to remain limited.

Trading volumes were expected to remain limited ahead of the Christmas Holiday.

EUR/USD hit 1.0984 during U.S. morning trade, the pair’s highest since December 16; the pair subsequently consolidated at 1.0977, gaining 0.57%.

The pair was likely to find support at 1.0802, the low of December 18 and resistance at 1.1059, the high of December 15.

The dollar weakened after the U.S. National Association of Realtors said that existing home sales tumbled 10.5% to a 19-month low of 4.76 million units last month from 5.32 million in October. Analysts had expected existing home sales to rise to 5.35 million units in November.

The data came shortly after the U.S. Commerce Department reported that gross domestic product grew at an annual rate of 2.0% in the three months ending September 30, better than expectations for 1.9%.

Preliminary data initially pegged U.S. growth at 2.1% in the third quarter. The U.S. economy grew 3.9% in the second quarter.

But the euro’s gains were expected to remain limited as inconclusive elections in Spain over the weekend sparked political concerns.

Spanish Prime Minister Mariano Rajoy said on Monday that his centre-right People's Party (PP) would talk to rivals in a bid to form a government, but the left-wing parties reportedly said they would not want Rajoy to remain in power.

The single currency was also higher against the pound, with EUR/GBP advancing 0.89% to 0.7398.

In the U.K., the Office for National Statistics earlier reported that public sector net borrowingrose to £13.56 billion in November from £6.75 billion in October, whose figure was revised from a previously estimated £7.47 billion.

Analysts had expected public sector net borrowing to rise to £11.00 billion last month.

Last modified on Wednesday, 23 December 2015

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