Euro erases losses against dollar on back of ZEW report

NEW YORK (Forex News Now) – The euro erased earlier losses against the U.S. dollar on Tuesday after a survey of investor sentiment in the euro zone showed that morale fell less than forecast during October.

In European morning currency market trading, EUR/USD hit 1.3942, up 0.06 percent on the day, after rising from the daily low of 1.3886.

The Mannheim-based ZEW think tank said earlier that its index of economic sentiment in the euro zone slid to 1.8 in October, from 4.4 in September. Analysts had expected October’s figure to come in at -2, two major online FX trading news outlets reported.

However, the institute’s report for Germany, the euro zone’s largest economy, was slightly worse than forecast, showing that German investor morale dropped more than expected during the month.

According to EUR USD analysis, EUR/USD was likely to touch immediate support around the low of Oct. 12, 1.3775, and encounter short-term resistance around Friday’s high, 1.4158.

The euro’s gains also came ahead of key reports on U.S. building permits and housing starts. The U.S. Federal Reserve chairman, Ben Bernanke, was also due to speak later in the day at a public engagement in Fairfax.

Elsewhere, the single currency climbed versus sterling: EUR/GBP traded at 0.8816, up 0.44 percent, according to intraday analysis.