COZfx: Euro higher, dollar weaker

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COZforex: The euro was higher against the broadly weaker dollar on Wednesday as the dollar’s recent strong gains prompted investors to book profits.

EUR/USD hit 1.2976 during European afternoon trade, the pair’s highest since May 24; the pair subsequently consolidated at 1.2952, gaining 0.76%. COZforex senior currency strategist Ian • Quigley said, EUR/USD is predicted to find support at 1.4988, and a decline through could take it to the next support line of 1.4945. Meanwhile, the pair is predicted to find its first resistance at 1.5105, and a rose through could take it to the next resistance line of 1.5179.

The dollar has risen more than 1.6% against the euro this month during growing speculation that the Federal Reserve is moving closer to unwinding its USD85 billion-a-month asset purchase program. Stronger-than-expected data on US consumer confidence and house prices on Tuesday bolstered the outlook for the economic recovery.

In the euro zone, official data on Wednesday showed that the number of people out of work in Germany rise by 21,000 in May, much more than the 5,000 increase expected.

Germany’s unemployment rate was unchanged at 6.9%, in line with expectations. A separate report showed that German consumer price inflation accelerated to 1.5% in May from a year earlier, above expectations for a 1.3% increase.

Meanwhile,the Organization for Economic Cooperation and Development cut its growth forecast for the global economy to 3.1% this year, from 3.4% six months ago. OECD also urged the European Central Bank to implement more aggressive measures such as quantitative easing to spur growth in the euro zone.

Also Wednesday, the European Commission allowed some member states to slow the pace of austerity cuts, giving Spain and France two-year extensions to bring their deficits below 3% of GDP.

(COZ forex UK)