Euro Rises; US Inflation Report In Focus

(RTTNews) - The euro recovered from its early lows against other major currencies in the European session on Tuesday, as investors awaited cues from U.S. inflation data later in the day and the Fed's monetary policy announcement on Wednesday.

U.S. CPI data for November may show inflation still cooling but staying well above the Fed's 2 percent annual target.

The Federal Reserve is widely expected to hold rates on Wednesday, with the spotlight squarely on the central bank's dot plot and summary economic projections as well as comments from Chair Jerome Powell during his press conference.

In economic news, data from the think tank ZEW showed that Germany's investor confidence strengthened to a nine-month high in December despite the current budget crisis. The ZEW Indicator of Economic Sentiment rose to 12.8 in December from 9.8 in November. This was the highest score since March and also came in above forecast of 8.8.

Investor confidence in the euro area also strengthened in December, the survey showed. At 23.0 points, the economic sentiment index gained 9.2 points from November.

The European currency traded lower against its major counterparts in the Asian session today.

In the European trading now, the euro rose to nearly a 2-week high of 0.8598 against the pound and a 5-day high of 1.0808 against the U.S. dollar, from early lows of 0.8558 and 1.0761, respectively. If the euro extends its uptrend, it is likely to find resistance around 0.87 against the pound and 1.09 against the greenback.

Moving away from an early 4-day low of 0.9435 against the Swiss franc, the euro advanced to 0.9480. The euro may test resistance near the 0.96 region.

The euro edged up to 157.30 against the yen, from an early low of 156.50. On the upside, 161.00 is seen as the next resistance level for the euro.

Against the Australia and the New Zealand dollars, the euro edged up to 1.6402 and 1.7589 from early 4-day lows of 1.6322 and 1.7485, respectively. The next possible upside target levels for the euro are seen around 1.66 against the aussie and 1.80 against the kiwi.

The euro climbed to a 4-day high of 1.4664 against the Canadian dollar, from an early low of 1.4593. The euro is seen finding resistance around the 1.49 region.

Looking ahead, U.S. inflation data for November, U.S. Redbook report and U.S. Federal budget statement for November are slated for release in the New York session.