Investing.com - The euro was holding above the 1.29 level against the dollar on Wednesday, remaining supported above 14-month lows as investors took a breather from selling the single currency.
EUR/USD was trading at 1.2930, off Tuesday’s lows of 1.2858, the weakest level since July 2013.
The pair was likely to find support at around the 1.2858 level and resistance at around 1.2985.
Demand for the dollar continued to be underpinned by heightened expectations for an early hike in U.S. interest rates after recent data indicated that the economic recovery is gaining momentum.
A study by the San Francisco Fed published on Monday indicated that central bank officials see rates rising earlier than markets expect.
Investors have shrugged off last week’s disappointing U.S. nonfarm payrolls report as they began to turn their attention to the outcome of next week’s Federal Reserve policy meeting.
The Fed is expected to cut its asset purchase program by another $10 billion next Wednesday, which would keep it on track for winding up the program in October, and to start raising interest rates sometime in mid-2015.
In contrast, the European Central Bank unexpectedly cut rates to record lows across the euro zone last week and unveiled new easing measures in a bid to shore up the faltering recovery and boost inflation.
The bank said the move was prompted after long term inflation expectations deteriorated in August.
Elsewhere, USD/JPY rose to fresh six year highs of 106.76 and was last up 0.53% to 106.74.
The euro was also higher against the softer yen, with EUR/JPY rising 0.47% to 138.03.