Investing.com - The euro slid to session lows against the dollar on Monday as expectations for a further reduction to the Federal Reserve’s stimulus program this week continued to support demand for the dollar.
EUR/USD hit 1.3654, the lowest since Thursday, and was last down 0.07% to 1.3667. The pair briefly touched highs of 1.3717 earlier in the session.
The pair was likely to find support at 1.3650 and resistance at 1.3738, Friday’s high and a three-week high.
Demand for the dollar continued to be underpinned ahead of the outcome of the Fed’s monthly meeting on Wednesday, amid expectations for a reduction in its bond buying program to USD65 billion from the current USD75 billion.
Market sentiment improved as emerging market currencies stabilized after Turkey’s central bank said it would hold an extraordinary policy meeting on Tuesday to discuss measure to ensure price stability. The announcement came after the lira hit the latest in a series of record lows against the dollar on Monday.
Emerging market currencies have been hard hit since the Fed began scaling back its asset purchase program, while worries over political instability and the outlook for growth for some countries also weighed.
In the euro zone, the head of the eurogroup of finance ministers Jeroen Dijsselbloem said Monday the euro zone's recovery will not be affected by contagion amid concerns over turmoil in emerging market economies.
The euro rose to session highs earlier after data showed that German business confidence rose to the highest level in two-and-a-half years in January.
The German research institute Ifo said its business climate index rose to 110.6 in January, above forecasts for a reading of 110.0 and up from 109.5 in December, indicating that businesses in the euro zone’s largest economy had a strong start to the year.
Elsewhere, the euro was slightly higher against the yen, with EUR/JPY easing up 0.14% to 140.15, recovering from six-week lows of 139.16.
The dollar was also higher against the yen. USD/JPY was last up 0.23% to 102.57, after falling as low as 101.78 earlier, the weakest level since December 6.