Investing.com - The euro dipped to 8-month lows against the dollar on Tuesday after a cheery U.S. consumer confidence report sent investors betting the Federal Reserve will deliver an upbeat assessment of the economy after its policy meeting ends on Wednesday.
In U.S. trading, EUR/USD was down 0.20% at 1.3413, up from a session low of 1.3409 and off a high of 1.3444.
The pair was likely to find support at 1.3399, the low from Nov. 21, and resistance at 1.3485, Thursday's high.
The dollar firmed after the Conference Board reported that its consumer confidence index rose to 90.9 in July from an upwardly revised 86.4 in June. It was the highest reading since October 2007, defying consensus forecasts for a decline to 85.3.
The data sent investors betting that the Federal Reserve on Wednesday will make fresh cuts to its monthly bond-buying program and deliver and upbeat take on the U.S. economy.
Investors were also keeping an eye on the release of July's nonfarm payrolls report due for release on Friday.
Fed Chair Janet Yellen has said that interest rates could rise sooner if the recovery in the labor market continued.
While markets expect the Fed to wrap up its bond-buying program this year—likely some time in or around October—uncertainty still persists as to how much time will pass after stimulus programs conclude and rate hikes begin, with data driving investor guesses on Fed timetables.
Elsewhere in the U.S., investors took in stride the S&P/Case Shiller Home Price Index.
The 20-city composite index for May grew 9.3% year-over-year, down from April's 10.8% reading, though the 10-city index grew 9.4%, down from April's 10.9%, though markets have priced in slackness in the U.S. housing sector.
The euro, meanwhile, came under pressure ahead of the release of the euro zone's latest inflation report on Thursday.
A soft consumer price index could prompt the European Central Bank to loosen policy while the Fed and other central banks prepare for tightening.
Elsewhere, the euro was up against the pound, with EUR/GBP up 0.06% at 0.7917, and up against the yen, with EUR/JPY up 0.04% at 136.95.
On Wednesday, the pair will move on the Fed's statement on interest rates and monetary policy as well as revised second-quarter U.S. GDP growth data and the ADP report on private sector job creation.
In the euro zone, Germany is to release preliminary data on consumer price inflation, while Spain is to publish flash estimates on consumer inflation and second quarter economic growth.