Investing.com - The dollar rose against the euro after an upbeat consumer confidence report cemented expectations for the Federal Reserve to announce fresh cuts to stimulus programs at a policy meeting this week.
In U.S. trading, EUR/USD was trading at 1.3658, down 0.12%, up from a session low of 1.3629 and off a high of 1.3688.
The pair was likely to find support at 1.3529, Thursday's low, and resistance at 1.3717, Monday's high.
Data released on Tuesday showed that U.S. consumer confidence rose to a five-month high in January.
The Conference Board said its index of consumer confidence improved to 80.7 this month from a downwardly revised 77.5 in December. Analysts were expecting the index to rise to 78.1, and the numbers fueled expectations that the Fed will conclude a two-day policy meeting on Wednesday announcing fresh cuts to its USD75 billion bond-buying program.
Fed asset purchases tend to weaken the dollar by driving down long-term interest rates, thus sending investors to asset classes like stocks, while talk of their dismantling often strengthens the greenback.
Meanwhile a separate report showed that U.S. durable goods orders fell unexpectedly in December, which capped the greenback's gains.
The Commerce Department reported earlier that durable goods orders fell 4.3% in December, confounding expectations for a 1.8% gain.
Core durable goods, which are stripped of volatile transportation items, orders fell 1.6% in December, the largest drop since March, compared to forecasts for a 0.5% increase.
Orders for core capital goods, a key barometer of private-sector business investment, fell 1.3% last month, confounding expectations for a 0.5% gain and after rising 2.6% in November.
Still, investors bet that months of broad improvements to U.S. economic indicators will prompt the Fed to trim around USD10 billion from its USD75 billion bond-buying program.
Elsewhere, the euro was down against the pound, with EUR/GBP slipping 0.04% to 0.8241, and up against the yen, with EUR/JPY trading up 0.22% at 140.54.
On Wednesday, the pair will move on the Fed's announcement on interest rates and monetary policy as well as its language.