Forex - EUR/USD gains as U.S. economic gauge disappoints

The euro hit 6-month highs against the dollar on Tuesday after a Federal Reserve barometer of U.S. economic activity disappointed investors and dashed expectations held by many that monetary stimulus measures would begin to taper in September.

In U.S. trading on Tuesday, EUR/USD was up 0.69% at 1.3426, up from a session low of 1.3323 and off from a high of 1.3452.

The pair was likely to find support at 1.3316, Monday's low, and resistance at 1.3520, the high from Feb. 13.

The Federal Reserve Bank of Chicago’s national activity index for July came in at -0.15 from a revised -0.23 in June, though the number came in much worse than market expectations for a -0.10.

The data sparked a dollar selloff by keeping expectations alive for many that the Federal Reserve will begin tapering stimulus tools in December as opposed to December.

Stimulus programs such as the Fed's USD85 billion in monthly asset purchases tend to keep the dollar weak to spur recovery by keeping long-term interest rates low.

Trading was edgy, as the Fed will release the minutes of its July policy meeting on Wednesday, which many hope will offer more definitive clues as to when asset purchases will begin to unwind.

Hit-or-miss economic indicators have fueled uncertainty recently as to when the Fed will announce plans to scale back stimulus tools.

The euro, meanwhile, was up against the pound and up against the yen, with EUR/GBP trading up 0.50% at 0.8564 and EUR/JPY trading up 0.27% at 130.46.

On Wednesday, markets will move on the release of the minutes from the Fed's July policy meeting.

Elsewhere, the U.S. will release industry data on existing home sales.