EUR/USD at one-month lows

Euro traded near one-month lows against the US dollar on Wednesday, as demand for the greenback was boosted by growing expectations that the Federal Reserve Bank will begin unwinding its Quantitative Easing in a foreseeable future.

EUR/USD fell down to a session low at 1.2961 at 5:38 GMT, after which consolidation followed at 1.2975. Support was likely to be found at levels around 1.2900, while resistance was to be encountered at June 27th high, 1.3056. The euro “remains under pressure having failed to make much impression on the 200 day moving average,” Karen Jones, a London-based technical strategist at Commerzbank AG, wrote in an e-mailed note to clients today, Bloomberg reported.

In the United States on Tuesday an official report showed, that factory orders climbed by 2.1% in May to 485 billion USD on a monthly basis, above the projected 2.0%, and further improving in comparison with April, when orders showed a 1.3% rise. Later today market players will be focusing on the ADP Employment report, which tracks hiring in the US private sector. “The private sector of the economy should continue to heal, while the amount of fiscal drag will begin to subside,” FED President of New York, Dudley said yesterday in a speech in Stamford, Connecticut, cited by Bloomberg.

Meanwhile, the common currency came under additional pressure on political situation in Portugal, where another minister has resigned, the minister of the Foreign Affairs. The yield of Portugals 10-year government bonds jumped by 33 base points on Wednesday, as this may be an implication, that new elections were approaching in the country. In the mean time, Greece is threatened to experience a slow down of the next tranche of bailout funding. Last but not least, the European Central Bank is expected to announce at its monthly meeting on Thursday, that an exit from its loose monetary policy is distant, in spite of the optimistic results in the sector of manufacturing in the Euro zone, which showed on Monday that contraction in sectors activity was smaller.

The dollar index, a benchmark for the greenbacks performance against six other major currencies, advanced to its highest level in a month ahead of US data, expected later in the day. The index rose by 0.11% to 83.87 at 7:07 GMT, the highest point since May 30th. US dollar has gained 7% this year, the best performer among 10 developed-nation currencies, tracked by Bloomberg Correlation-Weighted Indexes. The Japanese yen has lost 9.3%, the worst performer within the group, while the euro has added 5%.

Euro was lower versus the British pound, as EUR/GBP cross fell by 0.05% to 0.8558, while EUR/JPY advanced by 0.11% to 130.71.