Investing.com – The euro extended gains against the U.S. dollar on Tuesday, soaring to a five month high, as European bond yields narrowed amid speculation that the Federal Reserve will begin quantitative easing.
EUR/USD hit 1.3391 during European morning trade, the pair's highest since April 27; the pair subsequently consolidated at 1.3383, soaring 0.89%.
The pair was likely to find support at 1.3057, Tuesday's low and resistance at 1.3522, the high of April 20.
Speculation that the Fed would announce a renewal of large-scale Treasuries purchases, a strategy known as quantitative easing, mounted after Tuesday's rate statement, which indicated concerns over sluggish U.S. growth and low inflation levels.
Quantitative easing increases the supply of money, causing inflation to rise. It is used to stimulate an economy in a situation where interest rates are already low.
Earlier in the day, the yield on the 10-year German Bund, Europe's benchmark security, fell to a 1-month low of 2.34%. Meanwhile, Germany raised EUR 4.72 billion with an auction of 5-year Treasury bills.
The euro was also up against the pound, with EUR/GBP gaining 0.55% to hit 0.8537.
Earlier in the day, official data showed that industrial new orders in the euro zone fell significantly more-than-expected in July.
EUR/USD hit 1.3391 during European morning trade, the pair's highest since April 27; the pair subsequently consolidated at 1.3383, soaring 0.89%.
The pair was likely to find support at 1.3057, Tuesday's low and resistance at 1.3522, the high of April 20.
Speculation that the Fed would announce a renewal of large-scale Treasuries purchases, a strategy known as quantitative easing, mounted after Tuesday's rate statement, which indicated concerns over sluggish U.S. growth and low inflation levels.
Quantitative easing increases the supply of money, causing inflation to rise. It is used to stimulate an economy in a situation where interest rates are already low.
Earlier in the day, the yield on the 10-year German Bund, Europe's benchmark security, fell to a 1-month low of 2.34%. Meanwhile, Germany raised EUR 4.72 billion with an auction of 5-year Treasury bills.
The euro was also up against the pound, with EUR/GBP gaining 0.55% to hit 0.8537.
Earlier in the day, official data showed that industrial new orders in the euro zone fell significantly more-than-expected in July.