Investing.com - The euro firmed against the dollar on Tuesday as investors avoided the greenback to wait for the Federal Reserve to announce its decision on interest rates and any plans to taper monthly asset purchases that have weakened the greenback over the past year.
In U.S. trading on Tuesday, EUR/USD was up 0.18% at 1.3358, up from a session low of 1.3325 and off from a high of 1.3385.
The pair was likely to find support at 1.3254, Friday's low, and resistance at 1.3398, the high from Aug. 28.
Earlier Tuesday, the Fed opened a two-day monetary policy meeting, with many avoiding the dollar on uncertainty as to whether the U.S. central bank will announce plans to begin tapering its USD85 billion monthly bond-buying program, which weakens the dollar by driving down interest rates to spur recovery.
The dollar remained soft on the notion that the Fed will only slightly trim the amount of bonds it buys each month if it decides to adjust the policy at all.
Soft increases in the cost of living in the U.S. kept the greenback weak as well.
The U.S. consumer price index rose by 0.1% in August, missing expectations for a 0.1% gain.
The core consumer price index, which is stripped of volatile food and energy prices, rose 0.1% in August, in line with forecasts.
Across the Atlantic in Europe, closely watched ZEW index of German economic sentiment rose to the highest level since April 2010 in September, which bolstered the single currency.
The German ZEW index rose to 49.6 in September from 42.0 in August. Analysts were forecasting a reading of 46.0.
The ZEW index of euro zone economic sentiment jumped to 58.6 in September, the highest reading since September 2009 and up from 44.0 in August and well above analysts' calls for a 47.2 reading.
Elsewhere, the euro was up against the pound and up against the yen, with EUR/GBP trading up 0.15% at 0.8400 and EUR/JPY trading up 0.30% at 132.50.
On Wednesday, all eyes will focus on the Federal Reserve. Chairman Ben Bernanke is to hold a press conference after the rate announcement.
Elsewhere, the U.S. is to release official data on building permits and housing starts.
In U.S. trading on Tuesday, EUR/USD was up 0.18% at 1.3358, up from a session low of 1.3325 and off from a high of 1.3385.
The pair was likely to find support at 1.3254, Friday's low, and resistance at 1.3398, the high from Aug. 28.
Earlier Tuesday, the Fed opened a two-day monetary policy meeting, with many avoiding the dollar on uncertainty as to whether the U.S. central bank will announce plans to begin tapering its USD85 billion monthly bond-buying program, which weakens the dollar by driving down interest rates to spur recovery.
The dollar remained soft on the notion that the Fed will only slightly trim the amount of bonds it buys each month if it decides to adjust the policy at all.
Soft increases in the cost of living in the U.S. kept the greenback weak as well.
The U.S. consumer price index rose by 0.1% in August, missing expectations for a 0.1% gain.
The core consumer price index, which is stripped of volatile food and energy prices, rose 0.1% in August, in line with forecasts.
Across the Atlantic in Europe, closely watched ZEW index of German economic sentiment rose to the highest level since April 2010 in September, which bolstered the single currency.
The German ZEW index rose to 49.6 in September from 42.0 in August. Analysts were forecasting a reading of 46.0.
The ZEW index of euro zone economic sentiment jumped to 58.6 in September, the highest reading since September 2009 and up from 44.0 in August and well above analysts' calls for a 47.2 reading.
Elsewhere, the euro was up against the pound and up against the yen, with EUR/GBP trading up 0.15% at 0.8400 and EUR/JPY trading up 0.30% at 132.50.
On Wednesday, all eyes will focus on the Federal Reserve. Chairman Ben Bernanke is to hold a press conference after the rate announcement.
Elsewhere, the U.S. is to release official data on building permits and housing starts.