Investing.com - The dollar enjoyed a welcome shot in the arm from surprisingly strong new U.S. home sales figures and surged against the euro on Wednesday.
In U.S. trading, EUR/USD was trading at 1.3670, down 0.54%, up from a session low of 1.3662 and off a high of 1.3757.
The pair was likely to find support at 1.3562, the low from Feb. 12, and resistance at 1.3773, Monday's high.
The Commerce Department reported that new home sales jumped 9.6% to 468,000 units in January, f blowing past market expectations for new home sales to fall 1% to 400,000.
New home sales in December were revised up to 427,000 units from a previously reported 414,000 units.
The numbers renewed perceptions that a wave of soft production, jobs and other economic indicators hitting the wire this year reflected rough winter weather that disrupted commerce and not an underlying softening of demand.
Investors were looking ahead to testimony by Federal Reserve Chair Janet Yellen on Thursday for insight as to whether or not the U.S. central bank will maintain the current pace of reductions to its stimulus program.
Markets were expecting that Yellen will echo past statements that the U.S. monetary authority will continue rolling back its asset purchase program, as long as the economy improves as expected.
The Fed is currently buying $65 billion in Treasury and mortgage debt a month to suppress interest rates to spur recovery, which weakens the dollar as a side effect.
Markets largely ignored a report showing that Germany’s forward-looking Gfk consumer sentiment index ticked up to a seven-year high of 8.5 for March from 8.3 in February, indicating that the recovery in the euro area’s largest economy is gaining steam.
The euro was down against the pound, with EUR/GBP slipping 0.30% to 0.8214, and down against the yen, with EUR/JPY trading down 0.44% at 139.31.
The yen continued to see safe-haven demand from investors fleeing emerging-market exposure.
Russia’s rouble fell to a five year low against the dollar on Wednesday, driven lower by heightened political tensions in Ukraine.
Meanwhile in the U.K., the Office for National Statistics said gross domestic product increased by 0.7% in the three-month to December, unrevised from the preliminary estimate and in line with forecasts.
On a year-over-year basis, the U.K. economy expanded by 2.7% in the fourth quarter, down slightly from the preliminary estimate for 2.8% growth.
The largest contributors to fourth quarter growth were household spending, business investment and net trade, the ONS said. Business investments were revised up 8.5% from the same period a year earlier.
On Thursday in the euro zone, Germany is to publish preliminary data on consumer inflation, as well as data on the change in the number of people unemployed.
Also Thursday, the U.S. is to release data on durable goods orders, a leading indicator of production, and the weekly report on initial jobless claims.