Investing.com -- EUR/USD rose considerably on Thursday erasing some of its losses from a massive sell-off one session earlier, as currency traders continued to digest hawkish views from the Federal Reserve on the increasing likelihood of a December interest rate hike.
The currency pair traded in a broad range between 1.0897 and 1.1095, before settling at 1.0978, up 0.0051 or 0.53% in Thursday's session. It came one day after the euro plunged more than 1% following the hawkish comments from the Federal Open Market Committee. Over the last month of trading, the euro is down by approximately 2.35% against its American counterpart.
EUR/USD likely gained support at 1.0894, the low from October 28 and was met with resistance at 1.1496, the high from Oct. 15.
Investors continued to digest hawkish comments from the FOMC on Wednesday, when the U.S. central bank provided compelling indications that it could lift interest rates at its next meeting in December. The FOMC reframed its policy discussion on Wednesday, by including a line in its monetary policy statement that explicitly put a December lift-off back on the agenda. The line was conspicuously absent from its statement released after its previous meeting in September.
Citing weakness in the labor market and moderate economic growth, the FOMC voted to leave its benchmark Federal Funds Rate at a target range between zero and 0.25%. The rate has remained at a zero-bound range for more than five years after the Federal Reserve introduced a wide range of monetary easing measures aimed at rescuing the economy from near collapse.
The FOMC also downplayed the impact of the global economic slowdown on its policy decision in a dramatic reversal from its position last month. In September, the Fed opted to leave rates unchanged, after blaming headwinds from a slowing global economy for placing downward pressure on inflation. On Wednesday, the FOMC indicated that it will continue to monitor inflation developments closely as it weighs its decision.
Separately, the U.S. Department of Commerce said Thursday morning in advance estimates that Gross Domestic Product for the third quarter rose by 1.5%, slightly below consensus estimates of a 1.7% increase. By comparison, U.S. GDP in the second quarter increased by a 3.9% clip in its latest reading. An otherwise robust report was restrained by an inventory drag of minus-1.4%, which offset gains in domestic demand, consumer spending and equipment investment. Housing investment surged by 6.1% during the quarter, while final sales jumped by 3% overall.
The U.S. Dollar Index, which measures the strength of the greenback against a basket of six other major currencies, fell more than 0.50% to an intraday low of 97.32, before closing at 97.36. It came one day after the index nearly surged 1% following the Fed's comments.