Investing.com - The dollar held steady against the euro on Monday after an upbeat German business sentiment report sparked demand for the single currency, while ongoing expectations for the Federal Reserve to trim its monthly bond-buying program at a policy meeting this week supported the greenback.
In U.S. trading, EUR/USD was trading at 1.3673, down 0.03%, up from a session low of 1.3654 and off a high of 1.3717.
The pair was likely to find support at 1.3529, Thursday's low, and resistance at 1.3738, Friday's high.
German research institute Ifo reported earlier that its business climate index rose to 110.6 in January, beating forecasts for a 110.0 reading and up from 109.5 in December, indicating that businesses in the euro zone’s largest economy had a strong start to the year.
Also in Europe, the head of the eurogroup of finance ministers Jeroen Dijsselbloem said earlier that turmoil in emerging market economies won't affect the euro zone's recovery.
Meanwhile in the U.S., the Federal Reserve will conclude a monetary policy meeting on Wednesday, and investors remained bullish on the greenback amid expectations that monetary authorities will make fresh cuts to its USD75 billion in monthly bond purchases.
Stimulus tools such as Fed purchases of Treasury holdings and mortgage debt suppress interest rates to spur recovery, thus weakening the dollar as long as they remain in effect, while talk of tapering the program strengthens the U.S. currency.
Meanwhile in the U.S., the Census Bureau reported earlier that sales of new, single-family houses in December came in at a seasonally adjusted annual rate of 414,000, missing market calls for a 475,000 reading and also below November's revised figure of 445,000, which softened the dollar slightly.
The figure was still well above the December 2012 reading of 396,000, and the data also revealed that inventories remain lean and prices continue rising, which muted the report's impacts on the dollar.
Harsh winter weather may have affected sales in December as well.
Elsewhere, the euro was down against the pound, with EUR/GBP slipping 0.58% to 0.8252, and up against the yen, with EUR/JPY trading up 0.04% at 140.02.
In the euro zone on Tuesday, Italy is to hold an auction of 10-year government bonds.
The U.S. is to release data on durable goods orders, a leading indicator of production, as well as what will be a closely watch report on consumer confidence.