Forex - Euro pares gains vs. dollar in choppy trade

The euro pared gains against the dollar on Thursday, pulling back from three-week highs hit after comments by Federal Reserve Chairman Ben Bernanke raised doubts over the timing of a possible reduction to the bank’s easing program.

EUR/USD pulled back from 1.3206, the pair’s highest since June 21, to hit 1.3085 during late Asian trade, still up 0.81% for the day.

The pair was likely to find support at 1.2961, the session low and resistance at 1.3253, the high of June 21.

The dollar fell against all the major currencies after Bernanke said the Fed will continue to maintain accommodative monetary policy for the foreseeable future, citing low levels of inflation and the high unemployment rate.

The comments came after the minutes of the central bank’s June policy meeting showed that Fed policymakers remain divided over when to begin tapering its USD85 billion-a-month asset purchase program.

Around half of Fed policymakers believe the bank should start to scale back bond purchases by the end of the year, while others believe the labor market still remains too weak.

The dollar had rallied in the past month after Bernanke said the Fed could begin to taper bond buying by the end of 2013 if the economy continued to improve as the central bank expected.

Elsewhere, the euro was higher against the pound, with EUR/GBP rising 0.20% to 0.8656 and was lower against the yen, with EUR/JPY slipping 0.12% to 129.13.

The U.S. was to release the weekly report on initial jobless claims later in the trading day.