Investing.com - The dollar strengthened against the euro earlier Tuesday after the International Monetary Fund hiked its 2014 global growth forecast, while expectations for further cuts to Federal Reserve stimulus programs this month also bolstered the greenback before profit taking wiped out its gains.
In U.S. trading, EUR/USD was trading at 1.3565, up 0.09%, up from a session low of 1.3516 and off a high of 1.3568.
The pair was likely to find support at 1.3508, Monday's low, and resistance at 1.3699, the high from Jan. 14.
In revisions to its World Economic Outlook report published on Tuesday the IMF said it expects the global economy to grow by 3.7% in 2014, up from an October forecast of 3.6% growth.
The news fueled expectations for central banks to wind down stimulus programs such as bond purchases going forward, the Federal Reserve especially, as the multilateral lending institution predicted the U.S. economy to expand 2.8%, up from an October forecast of 2.6%.
Many market participants expect the Fed to trim its quantitative easing program to USD65 billion from the current USD75 billion at its next policy meeting on Jan. 29.
Fed bond purchases aim to prop up the economy by suppressing long-term interest rates, thus weakening the dollar as a side effect as investors flock to asset classes like stocks.
Profit taking wiped out the dollar's gains, especially as investors snapped up euro positions seen as a bargain earlier stemming from mixed sentiment data in the continent's largest economy.
The ZEW index of German economic sentiment fell to 61.7 for January from 62.0 in December, confounding analysts' expectations for an increase to 64.0.
Still, the current conditions index rose to a 20-month high of 41.2 from 32.4 in December, beating expectations for an increase to 34.1.
The euro was down against the pound, with EUR/GBP sliding 0.21% to 0.8233, and flat against the yen, with EUR/JPY trading at 141.19.
The pound enjoyed support after the IMF hiked Britain’s 2014 growth forecast to 2.4% from 1.9% in October, more than any other country.
Also in the U.K., the Confederation of British Industry said its index of industrial order expectations fell to -2 this month from 12 in December, well below expectations of a reading of 10.
However, the CBI said the volume of total orders for the next three months rose to 22 from 14, the highest level since April 2012. New orders in the three months to January saw their strongest growth in nearly three years.
The data also showed that the quarterly business outlook balance ticked down to 21 in the three months to January from 24 in the three months to October, which had been its highest since April 2010.
In U.S. trading, EUR/USD was trading at 1.3565, up 0.09%, up from a session low of 1.3516 and off a high of 1.3568.
The pair was likely to find support at 1.3508, Monday's low, and resistance at 1.3699, the high from Jan. 14.
In revisions to its World Economic Outlook report published on Tuesday the IMF said it expects the global economy to grow by 3.7% in 2014, up from an October forecast of 3.6% growth.
The news fueled expectations for central banks to wind down stimulus programs such as bond purchases going forward, the Federal Reserve especially, as the multilateral lending institution predicted the U.S. economy to expand 2.8%, up from an October forecast of 2.6%.
Many market participants expect the Fed to trim its quantitative easing program to USD65 billion from the current USD75 billion at its next policy meeting on Jan. 29.
Fed bond purchases aim to prop up the economy by suppressing long-term interest rates, thus weakening the dollar as a side effect as investors flock to asset classes like stocks.
Profit taking wiped out the dollar's gains, especially as investors snapped up euro positions seen as a bargain earlier stemming from mixed sentiment data in the continent's largest economy.
The ZEW index of German economic sentiment fell to 61.7 for January from 62.0 in December, confounding analysts' expectations for an increase to 64.0.
Still, the current conditions index rose to a 20-month high of 41.2 from 32.4 in December, beating expectations for an increase to 34.1.
The euro was down against the pound, with EUR/GBP sliding 0.21% to 0.8233, and flat against the yen, with EUR/JPY trading at 141.19.
The pound enjoyed support after the IMF hiked Britain’s 2014 growth forecast to 2.4% from 1.9% in October, more than any other country.
Also in the U.K., the Confederation of British Industry said its index of industrial order expectations fell to -2 this month from 12 in December, well below expectations of a reading of 10.
However, the CBI said the volume of total orders for the next three months rose to 22 from 14, the highest level since April 2012. New orders in the three months to January saw their strongest growth in nearly three years.
The data also showed that the quarterly business outlook balance ticked down to 21 in the three months to January from 24 in the three months to October, which had been its highest since April 2010.