Forex - EUR/USD at session highs before Fed minutes, Bernanke

The euro was at session highs against the dollar on Wednesday as markets awaited minutes from the Federal Reserve’s latest meeting and speech by Fed Chairman Ben Bernanke later in the trading day.

EUR/USD hit 1.2837 during U.S. morning trade, the session high; the pair subsequently consolidated at 1.2834, gaining 0.43%.

The pair was likely to find support at 1.2754, Tuesday’s low and a three-month low and resistance at 1.2881, Monday’s high.

The dollar looked likely to resume its strengthening trend if the Fed minutes and Ben Bernanke reiterated that the U.S. central bank is close to tapering its asset purchase program. 

The euro fell to its lowest level since April 4 against the dollar on Tuesday after a senior European Central Bank policymaker said the bank’s forward guidance on interest rates extended beyond 12 months.

The comments came after ECB President Mario Draghi said last week that rates would remain at low levels for an “extended” period, amid ongoing weakness in the euro zone economy.

On Tuesday, the International Monetary Fund said it expects the euro zone economy to contract by 0.6% this year, down from the 0.4% contraction it forecast in April. The IMF also cut its forecast for global growth this year to 3.1%, from 3.3% in April.

Elsewhere, the euro edged higher against the pound, with EUR/GBPrising 0.10% to 0.8605 and was lower against the yen, with EUR/JPYfalling 0.39% to 128.78.

Also Wednesday, Chinese trade data showed that exports fell unexpectedly in June from a year earlier, fuelling concerns over a slowdown in global demand. Imports were also lower on a year-over-year basis, indicating that domestic demand was weakening.