Investing.com - The dollar moved to 8-month lows against the euro on Thursday as markets bet the Federal Reserve will keep ultra-loose policies in place to make sure a recent fiscal showdown that closed the government and nearly exposed the country to default won't hamper recovery.
In U.S. trading on Thursday, EUR/USD was up 0.93% at 1.3661, up from a session low of 1.3516 and off from a high of 1.3682.
The pair was likely to find support at 1.3474, Wednesday's low, and resistance at 1.3711, the high from Feb. 1.
The U.S. Congress passed a bill to reopen the government and raise the debt ceiling on Wednesday, just hours ahead of a deadline that would have opened the doors to possible sovereign debt defaults.
The deal will fund the government until Jan. 15 and raise the government borrowing limit until Feb. 7.
Both Republicans and Democrats also agreed to talks over broad budget issues in an attempt to reach a longer-term deal by Dec. 13.
Still, the dollar weakened on the news amid concerns that the 16-day shutdown and accompanying default fears took their toll on an already fragile economic recovery, which could prompt the Federal Reserve to delay plans for rolling back its stimulus program until early 2014.
The Fed is currently buying USD85 billion in Treasury holdings and mortgage debt a month to boost the economy, a monetary policy tool known as quantitative easing that drives down interest rates to spur recovery, weakening the dollar in the process.
On Wednesday, the Federal Reserve released its Beige Book, which analyzes current economic conditions, and the document revealed that the U.S. central bank was concerned about the effects fiscal drags may have on recovery.
"Contacts across Districts generally remained cautiously optimistic in their outlook for future economic activity, although many also noted an increase in uncertainty due largely to the federal government shutdown and debt ceiling debate," the Beige Book read.
Elsewhere, the U.S. Department of Labor said Thursday the number of individuals filing for initial jobless benefits last week declined by 15,000 to a seasonally adjusted 358,000 from a downwardly revised 373,000 in the preceding week.
Analysts had expected U.S. jobless claims to decline to 335,000 last week.
A separate report showed that the Philly Fed manufacturing index ticked down to 19.8 from 22.3 in September, but came in above expectations for a reading of 15.0.
Elsewhere, the euro was down against the pound and up against the yen, with EUR/GBP trading down 0.36% at 0.8454 and EUR/JPY trading up 0.05% at 133.73.
In U.S. trading on Thursday, EUR/USD was up 0.93% at 1.3661, up from a session low of 1.3516 and off from a high of 1.3682.
The pair was likely to find support at 1.3474, Wednesday's low, and resistance at 1.3711, the high from Feb. 1.
The U.S. Congress passed a bill to reopen the government and raise the debt ceiling on Wednesday, just hours ahead of a deadline that would have opened the doors to possible sovereign debt defaults.
The deal will fund the government until Jan. 15 and raise the government borrowing limit until Feb. 7.
Both Republicans and Democrats also agreed to talks over broad budget issues in an attempt to reach a longer-term deal by Dec. 13.
Still, the dollar weakened on the news amid concerns that the 16-day shutdown and accompanying default fears took their toll on an already fragile economic recovery, which could prompt the Federal Reserve to delay plans for rolling back its stimulus program until early 2014.
The Fed is currently buying USD85 billion in Treasury holdings and mortgage debt a month to boost the economy, a monetary policy tool known as quantitative easing that drives down interest rates to spur recovery, weakening the dollar in the process.
On Wednesday, the Federal Reserve released its Beige Book, which analyzes current economic conditions, and the document revealed that the U.S. central bank was concerned about the effects fiscal drags may have on recovery.
"Contacts across Districts generally remained cautiously optimistic in their outlook for future economic activity, although many also noted an increase in uncertainty due largely to the federal government shutdown and debt ceiling debate," the Beige Book read.
Elsewhere, the U.S. Department of Labor said Thursday the number of individuals filing for initial jobless benefits last week declined by 15,000 to a seasonally adjusted 358,000 from a downwardly revised 373,000 in the preceding week.
Analysts had expected U.S. jobless claims to decline to 335,000 last week.
A separate report showed that the Philly Fed manufacturing index ticked down to 19.8 from 22.3 in September, but came in above expectations for a reading of 15.0.
Elsewhere, the euro was down against the pound and up against the yen, with EUR/GBP trading down 0.36% at 0.8454 and EUR/JPY trading up 0.05% at 133.73.