Investing.com - The euro rose against the dollar on Wednesday after Federal Reserve Chair Janet Yellen said interest rates will remain low for a considerable time, while a mixed bag of U.S. indicators also softened the greenback against the single currency.
In U.S. trading, EUR/USD was up 0.10% at 1.3829, up from a session low of 1.3804 and off a high of 1.3851.
The pair was likely to find support at 1.3791, Tuesday's low, and resistance at 1.3905, Friday's high.
The Federal Reserve will keep benchmark interest rates low even as the economy improves to ensure sustained recovery, Yellen said earlier.
Monetary authorities hope to see the unemployment rate at the end of 2016 reaching 5.2-5.6% and inflation at 1.7-2%, Yellen said.
"If this forecast was to become reality, the economy would be approaching what my colleagues and I view as maximum employment and price stability for the first time in nearly a decade. I find this baseline outlook quite plausible," Yellen said in prepared remarks in a speech she delivered at the Economic Club of New York.
In the meantime, markets should pay close attention to inflation and unemployment rates, as hiccups can serve as weather vanes when it comes to monetary policy and how long interest rates remain low.
"The larger the shortfall of employment or inflation from their respective objectives, and the slower the projected progress toward those objectives, the longer the current target range for the federal funds rate is likely to be maintained," Yellen said.
Elsewhere, U.S. industrial production rose 0.7% in March from February, beating expectations for a 0.5% reading, which supported the dollar earlier, though soft U.S. housing data watered down the greenback.
The Commerce Department reported earlier that housing starts rose 2.8% in March to 946,000, missing analyst forecasts for a 6.4% increase to 973,000 units.
Separately, building permits, an indicator of future demand for housing, fell 2.4% in March to 990,000, defying market expectations for a 0.6% increase.
Meanwhile in the euro zone, data revealed that the annual inflation rate slowed to 0.5% in March from 0.7% the previous month, but in line with expectations
Core inflation, which strips out volatile items like food and energy costs, fell to 0.7% from 1.0% in February, missing expectations for a 0.8% reading.
Euro zone inflation has now been in the European Central Bank's danger zone of below 1% for six straight months, fuelling speculation that policymakers will need to implement fresh stimulus measures to shore up the fragile recovery in the euro area.
The euro was down against the pound, with EUR/GBP down 0.33% to 0.8231, and up against the yen, with EUR/JPY up 0.45% at 141.41.
On Thursday, the U.S. is to publish data on initial jobless claims and a report on manufacturing activity in the Philadelphia region.
The euro zone is to publish data on the current account, while Germany is to produce data on producer price inflation.