Forex - Euro slips lower as dollar firms up

The euro edged lower against the firmer dollar in quiet trade on Tuesday as trade volumes in foreign exchange markets remained low due to the summer holidays.

EUR/USD hit 1.3163 during European afternoon trade, the session low; the pair subsequently consolidated at 1.3180, dipping 0.06%.

The pair was likely to find support at 1.3133, Monday’s low and resistance at 1.3253, the high of June 21.

The dollar was broadly lower earlier in the day after data showing that U.S. existing home sales fell unexpectedly in June dampened expectations that the Federal Reserve will start scaling back its asset purchase program this year.

The National Association of Realtors said that existing home sales fell 1.2% to an annual rate of 5.08 million units in June, but still remained close to three-and-a-half year highs.

Demand for the euro continued to be underpinned after Portugal’s Prime Minister Pedro Passos Coelho said Monday the current government will remain in office after political leaders resolved a deadlock that had threatened to derail the country's EUR78 billion bailout program.

The euro edged higher against the pound, with EUR/GBP rising 0.10% to 0.8594 and advanced against the yen, with EUR/JPY up 0.38% to 131.93.

Earlier Tuesday, Japan’s government upgraded its view of the economy for the third consecutive month in July, saying "areas of self-sustaining recovery can be observed."

In its monthly economic report, the government also said consumer prices are “leveling off," indicating that deflation is abating.