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Forex - EUR/USD in narrow range as Greece caution weighs

Published 02/22/2012, 10:31 AM
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Investing.com - The euro ticked up and down between small gains and losses against the U.S. dollar on Wednesday, as sustained fears over the sustainability of Greece’s debt load and concerns that the euro zone is slipping back into a recession weighed on risk appetite.

EUR/USD hit 1.3212 during U.S. morning trade, the session low; the pair subsequently consolidated at 1.3231, dipping 0.02%.

The pair was likely to find support at 1.3171, Monday’s low and resistance at 1.3292, Tuesday’s high and an eight-day high.

Investors remained wary amid ongoing uncertainty over whether a second EUR130 billion bailout for Greece will be enough to resolve the country’s fiscal woes as the economic situation continues to deteriorate.

Earlier Wednesday, ratings agency Fitch cut Greece’s credit rating to C from CCC and reiterated that a bond-swap agreement with private creditors would be a restricted default.

Fitch said it would review its stance on Greece again once the debt swap had been completed.

Meanwhile, preliminary data showed that manufacturing activity in the euro zone improved less-than-expected in February, remaining in contraction territory for the seventh consecutive month, while service sector activity contracted unexpectedly.

Data from Germany and France showed modest growth in business activity, albeit at a slower pace than in January, but activity in peripheral euro zone nation’s showed a steep decline this month.

A separate report showed that new industrial orders across the euro zone increased by 1.8% in December, erasing the previous month’s 1.1% drop.

In contrast, the euro was higher against the pound and the yen, with EUR/GBP advancing 0.70% to hit 0.8444 and EUR/JPY climbing 0.72% to hit 106.26.

In the U.S., a report by the National Association of Realtors showed that existing home sales rose by 4.3% to a seasonally adjusted 4.57 million units in January, disappointing expectations for a gain of 6.2% to 4.67 million units.

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