Investing.com - The euro softened against the dollar on Wednesday after an ECB policymaker said monetary authorities won't rule out using negative interest rates or asset purchases to spur European economic recovery.
Bottom fishing brought the single currency up from earlier lows.
In U.S. trading on Wednesday, EUR/USD was up 0.01% at 1.3438, up from a session low of 1.3391 and off from a high of 1.3454.
The pair was likely to find support at 1.3298, Thursday's low, and resistance at 1.3456, Tuesday's high.
The euro weakened earlier after ECB executive board member Peter Praet told the Wall Street Journal that the bank could cut deposit rates to below zero and commence asset purchases to lift inflation closer to its target of just below 2%.
Praet's comments came amid fears that deflationary pressures are growing in the euro area. The euro zone's annual inflation rate fell to a four-year low of 0.7% in October, prompting the ECB to cut rates to a record low 0.25% last Thursday.
Data released on Tuesday showed that Germany's annual consumer price index slowed to 1.2% in October, in line with expectations though still at its lowest level in more than three years and also down from 1.4% in September.
Still, despite a stream of bearish indicators and ECB comments, the euro managed to push back into positive territory on sentiments that currency was oversold in earlier trading.
Meanwhile the dollar continued to see some support amid ongoing expectations for the Federal Reserve to begin scaling back its USD85 billion in monthly bond purchases either in December or in early 2014 in wake of better-than-expected jobs and economic growth reports.
Stimulus tools such as monthly bond purchases aim to spur recovery by driving down long-term interest rates, weakening the dollar in the process.
On Thursday, the U.S. Senate will hold hearings to confirm Janet Yellen as the new chair of the Federal Reserve, which markets hope will provide indications over the direction of U.S. monetary policy.
Elsewhere, the euro took in stride hit-or-miss industrial output numbers.
Data released earlier revealed that industrial production in the euro zone fell 0.5% in September from a month earlier, but was 1.1% higher on a year-over-year basis.
Economists had forecast a monthly decline of 0.3% and an annual increase of 0.2%.
The single currency was down against the pound and down against the yen, with EUR/GBP trading down 0.62% at 0.8396 and EUR/JPY trading down 0.21% at 133.61.
The pound saw support after the BoE’s quarterly inflation report released earlier forecast that the U.K.'s unemployment rate will fall faster than it expected three months ago. BoE Governor Mark Carney stressed that there is a "two in five chance" that it could be 7% at the end of 2014.
The bank reiterated that the unemployment rate falling below 7% would not automatically trigger an increase in interest rates.
The BoE added it now expects economic growth of 1.6% this year, up from 1.4% predicted in August, and said growth will hit 2.8% in 2014, up from 2.5%. The bank still expects growth of 2.3% in 2015.
The bank said inflation fell back in the four months to October somewhat more than expected at the time of the August report. The near-term inflation outlook is lower than expected three months ago, and inflation is likely to fall a little further during 2014, helped by the recent appreciation in sterling.
Separately, the Office for National Statistics on Wednesday said that the number of individuals claiming unemployment benefits in the U.K. fell by 41,700 in October, better than expectations for a decline of 35,000 people.
September’s figure was revised to a drop of 44,700 people from a previously reported decline of 41,700.
The unemployment rate ticked down to 7.6% in the three months to September the ONS said.
Economists had expected the unemployment rate to remain unchanged at 7.7%.
On Thursday, the euro zone is to release a flash estimate of third quarter GDP, while Germany, France and Italy are also to release preliminary estimates of third quarter growth. The ECB is to publish its monthly bulletin.
Also on Thursday, the U.S. is to release official data on the trade balance, the difference in value between imports and exports. The U.S. is also to publish the weekly report on initial jobless claims.
Bottom fishing brought the single currency up from earlier lows.
In U.S. trading on Wednesday, EUR/USD was up 0.01% at 1.3438, up from a session low of 1.3391 and off from a high of 1.3454.
The pair was likely to find support at 1.3298, Thursday's low, and resistance at 1.3456, Tuesday's high.
The euro weakened earlier after ECB executive board member Peter Praet told the Wall Street Journal that the bank could cut deposit rates to below zero and commence asset purchases to lift inflation closer to its target of just below 2%.
Praet's comments came amid fears that deflationary pressures are growing in the euro area. The euro zone's annual inflation rate fell to a four-year low of 0.7% in October, prompting the ECB to cut rates to a record low 0.25% last Thursday.
Data released on Tuesday showed that Germany's annual consumer price index slowed to 1.2% in October, in line with expectations though still at its lowest level in more than three years and also down from 1.4% in September.
Still, despite a stream of bearish indicators and ECB comments, the euro managed to push back into positive territory on sentiments that currency was oversold in earlier trading.
Meanwhile the dollar continued to see some support amid ongoing expectations for the Federal Reserve to begin scaling back its USD85 billion in monthly bond purchases either in December or in early 2014 in wake of better-than-expected jobs and economic growth reports.
Stimulus tools such as monthly bond purchases aim to spur recovery by driving down long-term interest rates, weakening the dollar in the process.
On Thursday, the U.S. Senate will hold hearings to confirm Janet Yellen as the new chair of the Federal Reserve, which markets hope will provide indications over the direction of U.S. monetary policy.
Elsewhere, the euro took in stride hit-or-miss industrial output numbers.
Data released earlier revealed that industrial production in the euro zone fell 0.5% in September from a month earlier, but was 1.1% higher on a year-over-year basis.
Economists had forecast a monthly decline of 0.3% and an annual increase of 0.2%.
The single currency was down against the pound and down against the yen, with EUR/GBP trading down 0.62% at 0.8396 and EUR/JPY trading down 0.21% at 133.61.
The pound saw support after the BoE’s quarterly inflation report released earlier forecast that the U.K.'s unemployment rate will fall faster than it expected three months ago. BoE Governor Mark Carney stressed that there is a "two in five chance" that it could be 7% at the end of 2014.
The bank reiterated that the unemployment rate falling below 7% would not automatically trigger an increase in interest rates.
The BoE added it now expects economic growth of 1.6% this year, up from 1.4% predicted in August, and said growth will hit 2.8% in 2014, up from 2.5%. The bank still expects growth of 2.3% in 2015.
The bank said inflation fell back in the four months to October somewhat more than expected at the time of the August report. The near-term inflation outlook is lower than expected three months ago, and inflation is likely to fall a little further during 2014, helped by the recent appreciation in sterling.
Separately, the Office for National Statistics on Wednesday said that the number of individuals claiming unemployment benefits in the U.K. fell by 41,700 in October, better than expectations for a decline of 35,000 people.
September’s figure was revised to a drop of 44,700 people from a previously reported decline of 41,700.
The unemployment rate ticked down to 7.6% in the three months to September the ONS said.
Economists had expected the unemployment rate to remain unchanged at 7.7%.
On Thursday, the euro zone is to release a flash estimate of third quarter GDP, while Germany, France and Italy are also to release preliminary estimates of third quarter growth. The ECB is to publish its monthly bulletin.
Also on Thursday, the U.S. is to release official data on the trade balance, the difference in value between imports and exports. The U.S. is also to publish the weekly report on initial jobless claims.