EUR/USD remained higher after Summers decision to leave contest for Fed

The euro preserved gains against the US dollar on Monday, as Lawrence Summers left the contest for the Federal Reserve Chairman post, which dampened expectations of a possible early halt to expansionary monetary policy.

EUR/USD hit a session high at 1.3381 during the early phase of Asian trade, also the pairs highest point since August 28th, after which consolidation followed at 1.3360, gaining 0.42% for the day. Support was expected to be found at September 13th low, 1.3253, while resistance was to be encountered at psychological level of 1.3400.

US dollar lost ground against peers, after it became clear that President Obamas favorite candidate for the post of Fed Chairman until yesterday, Lawrence Summers withdrew from the contest. This eased concerns that he would roll back stimulus measures more eagerly than his main contender for the Governor post, Janet Yellen.

Market players were eyeing the two-day meeting on policy by the Federal Reserve Bank starting tomorrow, as most experts projected a possible reduction of scale of stimulus to 75 billion USD from the current monthly pace of 85 billion USD of bond purchases. Fed officials have pledged to maintain the benchmark rate close to zero at least as long as unemployment rate in the country exceeds 6.5% and inflation outlook is no more than 2.5%, with the 2% target, considered as ensuring price stability.

Later in the day the Euro zone will release data on the harmonized index of consumer prices, while the United States will publish reports on the New York Empire Manufacturing Index and industrial production.

Meanwhile, speculations appeared that considerations of an eventual military strike on Syria have been postponed, as Russia and the United States reached an agreement on Saturday that Syria was to destroy all its supplies of chemical weapons until the mid-2014.

Elsewhere, the euro was steady against the sterling, as EUR/GBP cross ticked up a mere 0.01% to trade at 0.8383 at 7:53 GMT. EUR/JPY pair was also stable, gaining 0.02% on a daily basis to trade at 132.07 at 7:55 GMT.