Dollar Strong As Yellen Prepares To Step In To New Role

The euro traded steadily at $1.3437 on Wednesday morning after a tough week of losses following poor inflation data and a surprise European Central Bank rate cut.

The common currency has been weak against the dollar as the US currency gained strength from speculation that the US Federal Reserve will begin tapering sooner than most had expected.

Last week, US payrolls data surprised investors and prompted many analysts to question whether or not the Fed would consider tapering at its December meeting. On Tuesday, Atlanta's Fed President Dennis Lockhart spoke about the bank's intentions, and did not rule out the possibility of cutting back on the $85 billion per month stimulus spending plan at the Fed's December policy meeting.

Now, investors will be focused on Janet Yellen as she completes the final stages before becoming the Fed's new president. Yellen will appear at a senate confirmation hearing on Thursday, where she will speak about her view on monetary policy. Since becoming a candidate for the position, Yellen has kept her mouth shut about her ideas, and the markets have largely assumed she will be very dovish. Her remarks on Thursday will give taper watchers fresh clues about the bank's direction.

Meanwhile, in the eurozone, policymakers attempted to address the region's sky high unemployment figures at a meeting in Paris. The latest unemployment figures show that nearly a quarter of young Europeans are still unemployed despite the region's efforts to bring the figures down.

According to the Wall Street Journal, the bloc's policymakers aren't expected to come up with any new policies, but instead to review old promises and find a way to deliver on them. At past meetings, policy makers agreed to provide training and assistance to young people without a job and earmarked 45 billion euros for the task. Now, Europe's leaders must decide how to distribute those funds and their best usage.

By Laura Brodbeck