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Forex - EUR/USD falls on U.S. data, dovish Draghi comments

Published 09/24/2014, 11:44 AM
Updated 09/24/2014, 11:45 AM

Investing.com - The euro flirted with 14-month lows against the dollar on Wednesday after data revealed new U.S. homes sales soared last month, while dovish comments from European Central Bank President Mario Draghi kept the pair lower as well.

In U.S. trading, EUR/USD was down 0.54% at 1.2777, up from a session low of 1.2774 and off a high of 1.2864.

The pair was likely to find support at 1.2754, the low from July 9, 2013, and resistance at 1.2903, Tuesday's high.

The Census Bureau reported earlier that U.S. new home sales data rose 18.0% last month to 504,000 units, far surpassing expectations for a 4.4% gain to 430,000 units. New home sales for July were revised to a 1.9% increase from a previously estimated 2.4% drop.

The data came a day after a report showed that the U.S. manufacturing sector expanded in September close to market expectations and fueled already growing expectations that the Federal Reserve may hike interest rates sooner than markets have previously expected.

Meanwhile across the Atlantic, ECB President Mario Draghi said the bank will keep its monetary policy "accommodative" for as long as needed and use every tool at its disposal to fight deflation, comments that softened the euro.

"Monetary policy will remain accommodating for a long time and I can tell you that the Governing Council is unanimous in committing itself to using the tools at its disposal to bring inflation back to just under 2%," Draghi said.

"Interest rates will remain low because they can’t get much lower," he added.

The ECB unexpectedly cut rates to record lows this month in a bid to address slowing inflation.

Elsewhere, Germany's Ifo business confidence index deteriorated for the fifth successive month in September.

The Ifo economic institute's business climate index fell to 104.7 from 106.3 in August. It was the lowest level since April 2013 and much weaker than economists’ forecasts for 105.7.

The data added to fears that the euro zone’s largest economy is losing momentum.

Elsewhere, the euro was down against the pound, with EUR/GBP down 0.20% at 0.7823, and down against the yen, with EUR/JPY down 0.56% at 139.11.

On Thursday, expect markets to move on U.S. durable goods orders and weekly jobless claims numbers.

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