Investing.com - The euro trimmed gains against the dollar Monday, pulling back from two-week highs after a report showed that U.S. pending home sales rose for the first time in nine months in March, indicating that the housing market is stabilizing.
EUR/USD was last trading at 1.3852, up 0.13%, off session highs of 1.3880.
The pair was likely to find support at 1.3813, the session low and resistance at 1.3895.
The dollar found support after the National Association of Realtors reported that pending home sales jumped 3.4% last month, easily surpassing expectations for a 1% gain.
Pending home sales for February were revised to a 0.5% drop from a previously reported decline of 0.8%.
On a year-over-year basis, pending home sales were still down 7.9% in March.
The euro rose to two-week highs against the dollar earlier, buoyed up by expectations that the upcoming euro zone inflation report, due out on Wednesday, would show that consumer prices ticked higher this month.
An increase in the euro zone’s inflation rate would ease pressure on the European Central Bank to implement additional monetary policy measures.
In March, the annual rate of inflation in the euro zone slowed to 0.5%, the lowest since November 2009. The ECB targets an inflation rate of close to but just under 2%.The consensus forecast is for the inflation rate to rise to 0.8%.
Last week, ECB President Mario Draghi reiterated warnings that further gains in the euro could trigger additional monetary easing to stop inflation from falling. He also said the ECB could launch a "broad-based" asset purchase program if the medium-term inflation outlook deteriorated.
On Monday, ECB Governing Council member Christian Noyer said that while the strong euro was weighing on consumer prices the euro area was not at risk of falling into deflation.
Elsewhere, the single currency extended gains against the yen, with EUR/JPY rising 0.53% to 142.11.