Forex - EUR/USD makes gains on U.S., European data, eyes Fed meet

Investing.com - The euro hit four-month highs against the dollar on Tuesday on soft U.S. housing data and better-than-expected German sentiment numbers.In U.S. trading on Tuesday, EUR/USD was up 0.30% at 1.3406, up from a session low of 1.3326 and off from a high of 1.3416.The pair was likely to find support at 1.3318, Monday's low, and resistance at 1.3434, the high of February 20.Uncertainty over the Federal Reserve's plans to scale back stimulus measures has fueled volatility in global markets in recent days, though U.S. soft housing data gave the euro room to rise in a guarded session, with many investors eager for the Fed to make its announcement on interest rates and monetary policy on Wednesday followed by a press conference with Chairman Ben Bernanke afterwards.Official data on Tuesday showed that U.S. consumer prices rose in line with expectations in May, which markets interpreted as a sign that the U.S. central bank may continue its easing programs, as rates are still hovering below the Fed's 2.0% target. The Labor Department said the country's consumer price index in May rose 1.4% on year, in line with forecasts and up from 1.1% in April.Consumer prices rose 0.1% in May from April, slightly below expectations for a 0.2% increase.Core inflation, which excludes food and energy costs, rose 0.2% in May from April, also in line with expectations.The year-on-year core inflation rate came in unchanged at 1.7%In a separate report, the Commerce Department said the number of building permits issued in the U.S. fell 3.1% in May to 974,000, outpacing expectations for a decline of 2.8% to 975,000 units, which gave the euro room to rise.U.S. housing starts rose by 6.8% last month to hit 914,000 units, below expectations for an increase of 11.4% to 950,000.Meanwhile across the Atlantic in Europe, the ZEW index of German economic sentiment rose to 38.5 in June from 36.4 in May, beating analysts' calls for the index to rise to 38.1.The report said the German economy is likely to slowly pick up speed in the second half of this year, which further fueled the euro's gains.Investors largely ignored comments by European Central Bank President Mario Draghi, who said the eurozone's monetary authority stood ready to use interest rates and non-standard measures to shore up growth in the currency bloc's economy.The euro, meanwhile, was up against the pound and up against the yen, with EUR/GBP trading up 0.83% at 0.8574, and EUR/JPY trading up 1.06% at 127.37.On Wednesday, all eyes will focus on the Federal Reserve.
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