Forex - EUR/USD edges lower ahead of Fed

Investing.com - The euro edged lower against the dollar on Wednesday amid ongoing speculation over whether the Federal Reserve will announce any reduction to its stimulus program following its final policy meeting of the year later in the day.

EUR/USD slid 0.15% to session lows of 1.3746, down from 1.3766 on Tuesday.

The pair was likely to find support at 1.3722, Tuesday’s low and resistance at 1.3781, Tuesday’s high.

The shared currency shrugged off a report showing that the Ifo German business climate index rose to a 20-month high of 109.5 in December, in line with forecasts and up from 109.3 in November.

Investors remained wary ahead of the outcome of the Fed’s final policy meeting of 2013, with some expecting the bank to make a small reduction in the pace of its USD85 billion-a-month asset purchase program.

However, many believe that the bank will wait until early next year to start rolling back stimulus, despite recent indications the U.S. economic recovery is deepening.

The euro fell to one-week lows against the pound, with EUR/GBP dropping 0.69% to 0.8406.

Sterling strengthened across the board after data on Wednesday showed that the U.K. unemployment rate unexpectedly fell to a four-and-a-half year low in October, fuelling hopes that the Bank of England will raise interest rates ahead of other central banks.

The Office for National Statistics said the U.K. unemployment rate fell to 7.4% in the three months to October, the lowest level since April 2009.
Economists had expected the jobless rate to remain unchanged at 7.6%.

Meanwhile, the minutes of the BoE’s December meeting said further significant gains in sterling could put the U.K. economic recovery at risk.

Elsewhere, the dollar moved higher against the yen. USD/JPY hit session highs of 103.03 and was last up 0.30% to 102.97, holding below the five year peaks of 103.91 struck on Friday.