The euro traded lower against the U.S. dollar yesterday, as recent strong domestic economic data decreased the chances that the Federal Reserve will institute new monetary easing.
The U.S. dollar was bolstered as investors reduced expectations for additional monetary easing after the Fed upgraded its outlook for the economy during the rate statement Tuesday.
Fed Chief Ben Bernanke stated that he now expects to see “moderate economic growth” and that the high level of unemployment is likely to return slowly. Higher energy and oil prices could place upward pressure on inflation.
In the Eurozone, a report showed that industrial production across the region rose in January for the first time in three months, while the annualized rate of consumer price inflation was unchanged in February and remained above the European Central Bank’s target.
In the UK, unemployment rose by 28,000 to 2.67 million during the three months to January however the unemployment rate stayed at 8.4%, according to figures from the Office for National Statistics.
Risk on the downside for the euro remains and whether the ECB Monthly report at 9am will help the 17 nation currency recovery is yet to be seen!
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