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Forex - EUR/USD holds steady as caution over Greece persists

Published 02/25/2015, 07:43 AM
Updated 02/25/2015, 07:43 AM
© Reuters.  Euro little changed against dollar despite Greece bailout extension

© Reuters. Euro little changed against dollar despite Greece bailout extension

Investing.com - The euro held steady against the U.S. dollar on Wednesday, as investors remained cautious despite the approval of a four-month extension of Greece's bailout, while Tuesday's remarks by Federal Reserve Chair Janet Yellen dampened demand for the greenback.

EUR/USD hit 1.1388 during European afternoon trade, the pair's highest since Monday; the pair subsequently consolidated at 1.1345.

The pair was likely to find support at 1.1277, the low of February 20 and resistance at 1.1449, the high of February 19.

Sentiment on the euro remained fragile amid lingering doubts over the agreement to extend Greece’s bailout by four months.

Both the International Monetary Fund and the European Central Bank warned Tuesday that Greece’s reform plans are not detailed enough and said Athens will need to do more to secure the release of further bailout funds.

The dollar weakened broadly after Fed Chair Yellen said it was "unlikely" that economic conditions would warrant an interest rate increase for "at least the next couple of FOMC meetings".

In prepared remarks during testimony to the Senate Banking Committee, Yellen added that if the economy keeps improving as the Fed expects it will modify its forward guidance, but emphasized that a modification of its language should not be read as indicating that a rate hike would automatically happen within a number of meetings.

On the economy, Yellen said growth was expected to be strong enough to result in a further gradual decline in the unemployment rate and added that while overseas risks remain "the recent decline in world oil prices could boost overall global economic growth more than we expect."

The euro was lower against the pound, with EUR/GBP slipping 0.12% to 0.7329.

In the U.K., the British Bankers' Association earlier reported that mortgage approvals rose by 36,400 in January, beating expectations for an increase of 36,200. December's figure was revised to a 35,800 gain from a previously estimated rise of 35,700.

Later in the day, the U.S. was to release data on new home sales.

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