EUR/USD consolidates ahead of US data

Last night's decision by the US Federal Reserve to delay the beginning of stimlus tapering has resulted in a weakening US dollar across the board.

The euro has now pushed to highs not seen since February. The pullback in the US treasuries has been beneficial for European peripheral bond yields, but a stronger currency overall could be to the detriment of the currently weak eurozone recovery.

The US jobless claims have had a somewhat muted effect, coming in at 309,000 last week against an expectation of 330,000. Last week’s figure has now been revised, but only slightly, rising by 2000 to 294,000.

Existing home sales and the manufacturing index of the Federal Reserve Bank of Philadelphia are due out shortly. Any failure to meet consensus estimates will be met with a weaker dollar.

If EUR/USD keeps above the $1.3420 level the bias will be on the side of the single currency, and any protracted move through the intraday and long-term resistance level of $1.3560 could easily make way for a retest of the $1.37 highs seen earlier this year.

Spot FX EUR/USD chart

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