The U.S. dollar strengthened against its major counterparts in the European session on Tuesday, as investors await the release of the Federal Reserve’s latest monetary policy minutes due tomorrow.
The Fed had reduced its interest rates for the third time at its rate setting meeting on October 29-30.
The minutes could provide a detailed picture for support to ‘pause’ on rate cuts within the committee.
Investors will also be monitoring more clarity about the Fed’s future move.
Sentiment was aided by the Trump administration’s decision to grant extension to U.S. companies to continue doing business with Chinese telecom giant Huawei Technologies.
On economic front, U.S. housing starts for October is due at 8:30 am ET.
The currency declined against its major counterparts in the previous session, except the franc.
The greenback advanced to 108.84 against the yen, from a low of 108.46 hit at 8:00 pm ET. If the greenback rallies further, it is likely to test resistance around the 111.00 region.
Bank of Japan Governor Haruhiko Kuroda said that the central bank still has room to lower interest rates further.
However, there were limits to how long rates could go down, he said at the parliament.
The greenback climbed to a 6-day high of 0.9919 against the franc, following a decline to 0.9881 at 5:15 pm ET. On the upside, 1.01 is likely seen as the next resistance level for the greenback.
After falling to 1.2970 against the pound at 2:00 am ET, the greenback reversed direction and rose to 1.2926. The greenback is seen finding resistance around the 1.27 level.
The greenback was trading at 1.3209 against the loonie, slightly up from near a 2-week low of 1.3199 it touched at 5:00 pm ET. The next key resistance for the greenback is likely seen around the 1.35 level.
In contrast, the greenback dropped to 5-day lows of 0.6824 against the aussie and 0.6419 against the kiwi, from its early 4-day highs of 0.6785 and 0.6382, respectively. The next likely support for the greenback is seen around 0.71 against the aussie and 0.66 against the kiwi.
The greenback pulled back to 1.1080 against the euro, down from a high of 1.1063 it set at 8:00 pm ET. The greenback is poised to challenge support around the 1.12 mark.
Data from the European Central Bank showed that the euro area current account surplus declined in September largely due to the fall in primary income.
The current account surplus totaled EUR 28 billion in September versus EUR 29 billion in August. In the same period last year, the surplus came in at EUR 21 billion.
Looking ahead, Canada manufacturing sales for September and U.S. housing starts for October will be featured in the New York session.
The material has been provided by InstaForex Company – www.instaforex.com