EUR/USD hit 1.3071 during U.S. morning trade, the session low; the pair subsequently consolidated at 1.3183, shedding 0.31%.
The pair was likely to find support at 1.3049, Tuesday’s low and resistance at 1.3173, Tuesday’s high.
The dollar was boosted after official data showed that the number of people who filed for unemployment assistance in the U.S. fell more-than-expected last week, while a separate report showed that manufacturing activity in the Philadelphia-region in July expanded at the fastest pace since March 2011 in July.
The U.S. Department of Labor said the number of individuals filing for initial jobless benefits last week fell by 24,000 to 334,000, compared to expectations for a drop of 13,000 to 345,000.
The Federal Reserve Bank of Philadelphia said that its manufacturing index rose 19.8 in the current month from June’s reading of 12.5. Analysts had expected the index to decline to 7.8.
Demand for the dollar continued to be underpinned by expectations that the Federal Reserve will start to unwind its bond buying later this year following comments by Chairman Ben Bernanke on Wednesday.
In his semi-annual testimony to Congress Bernanke said the central bank could scale back its asset purchases by the end of the year if the economy continues to improve, but added that there was no “preset course.”
Bernanke said the economic recovery was continuing at a moderate pace but reiterated that monetary policy will remain accommodative for the foreseeable future.
Elsewhere, the euro was lower against the pound, with EUR/GBP down 0.13% to 0.8614 and was higher against the weaker yen, with EUR/JPYadvancing 0.705 to 131.56.
Sterling rose to session highs against the euro and the dollar earlier after official data showed that U.K. retail sales rose 0.2% in June, in line with expectations and were 2.2% higher compared to the same month last year.
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