The euro strengthened on Tuesday and managed to overcome the 1.3478/85 zone to reach its highest level in 13 months, just shy of 1.3500 as disappointing U.S. consumer confidence weighed on the greenback.
Meanwhile, U.S. stocks edged higher, supported by better-than-expected earnings, and as investors shrugged off sluggish consumer confidence data. European markets were mixed, despite strong a German confidence reading.
However, a mild risk-off tone prevails in markets as investors refrain from taking big positions ahead of the FOMC decision and the NFP report on Friday.
Euro Prints Fresh 13-Month High
The shared currency took another step higher and broke above its 2012 peak to reach its highest level since December 2011 at 1.3495. However, the EUR/USD lacked momentum to overcome the major 1.3500 handle and eased from highs. It was last up 0.1% at the 1.3465 zone.
A break above 1.3500 would confirm the medium-term positive bias, with 1.3600 as the next target. On the downside, the 1.3400 level should contain dips to keep the positive tone alive, while a break below could see the cross slide toward 1.3200 pretty quickly, with 1.3360 as intermediate support.
"The euro is lower against the crosses, but there appears to be some scope for further gains against the dollar in the near term," says Jason Ball, FX Analyst at Wells Fargo Bank. Meanwhile, Valeria Bednarik, chief analyst at FXstreet.com, notes that the midterm bullish trend remains quite firm and 1.3540 now seems possible, "although loss of the 1.3410 level should trigger some intraday bearish move towards the 1.3360 price zone."
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.