Forex - EUR/USD slips on profit taking, Fed easing speculation

Investing.com - The euro traded down against the U.S. dollar  Monday, but speculation for additional monetary easing from the Federal Reserve at its upcoming policy meeting kept the greenback in check..

EUR/USD hit 1.2770 during U.S. trade, the session low; the pair subsequently consolidated at 1.2795, down 0.16%.

The pair was likely to find support at 1.2625, Friday’s low and near-term resistance at 1.2816, Friday’s high and a three-and-a-half month peak.

Profit taking hit the single currency after Friday’s sharp gains, while investors exhibited caution ahead of a German court ruling on the constitutionality of the euro zone’s bailout fund, the European Stability Mechanism on Wednesday.

Demand for the single currency continued to remain supported after the European Central Bank unveiled details of its bond purchasing program, which is aimed at lowering the borrowing costs of peripheral euro zone members.

Earlier Monday, a report showed that investor confidence in the euro zone improved this month for the first time since March, largely due to optimism surrounding the ECB’s bond purchasing plan.

Meanwhile, the greenback remained under pressure amid speculation that that the U.S. central bank will implement further quantitative easing measures to strengthen the economic recovery following its policy meeting on Thursday.

The Department of Labor said Friday that the U.S. economy added 96,000 jobs in August, well below expectations for 125,000, following a downwardly revised 141,000 in July.

The euro was lower against the pound and the yen, with EUR/GBP slipping 0.15% to 0.7994 and EUR/JPY down 0.14% to 100.14.

Trade looked likely to remain subdued on Monday, as investors looked ahead to Wednesday’s German court ruling on the ESM, as well as the outcome of the Fed’s policy meeting on Thursday.