Forex - EUR/USD lower despite mediocre U.S. data

Investing.com - The euro traded lower against the U.S. dollar Tuesday, despite the release of mediocre U.S. confidence and housing data as Spanish borrowing costs worries weighed on the single currency

EUR/USD hit 1.3318 during U.S. afternoon trade, the session low; the pair subsequently consolidated at 1.3339, sliding 0.13%.

The pair was likely to find support at 1.3191, Monday’s low and resistance at 1.3384, the session high and a one-month high.

The greenback found support after a report showed that U.S. consumer confidence dipped slightly in March but remained close to the previous month’s one-year high. 

The Conference Board’s index of consumer confidence slipped down to 70.2 from  71.6 in February, but was better than expectations for a dip to 70.3.

However, the greenback’s rally was softened after a report indicated that the Standard & Poor’s/Case-Shiller U.S. house price index fell at an annualized rate of 3.8% in January from a year earlier, meeting expectations

U.S. home prices in December were revised to a decline of 4.1% from a previously reported 4.0% drop.

The dollar had weakened broadly on Monday, as dovish comments by Federal Reserve Chairman Ben Bernanke sparked speculation over the possibility of a third round of easing from the central bank.

The euro remained under pressure as concerns over Spanish borrowing costs weighed ahead of the country’s budget statement on Friday, amid fears that the government will pull back on imposing harsh austerity measures despite a potential recession.

Meanwhile, a report earlier showed that an index of German consumer confidence fell unexpectedly in March.

The euro was lower against the pound but eased higher against the yen, with EUR/GBP slipping 0.15% and EUR/JPY rising 0.11% to hit 110.76.

Also Tuesday, Eurogroup chairman Olli Rehn said that euro zone finance ministers would reach an agreement on the size of the bailout fund for indebted countries at a meeting to be held in Copenhagen on Friday.

“We have already taken significant decisive steps towards a stronger and permanent firewall to contain contagion and calm down market stability if it arises. Further reinforcement will be decided on Friday, which will help us remove any remaining doubts”, he said.