EUR/USD (a 4-hour chart)
The U.S. dollar grew slightly against the background of the new signs that the U.S. housing market recovery is gaining momentum. These data indicate that the economy is strong enough to curtail the Fed's stimulating measures later this year. The data showed that sales in the primary housing market in May rose to near five-year high, and the widely tracked indicator of housing prices jumped up. Other reports showed that orders for durable goods in May grew more than expected, which may increase the industrial production in the coming months, as a barometer of consumer confidence in June reached its highest level since January 2008.
Encouraging data reinforced expectations that the Federal Reserve will phase out its asset purchase program this year for which $85 billion are being spent every month. This policy, known as quantitative easing, is designed to keep interest rates low and support economic growth and employment. Fed Chairman Ben Bernanke outlined the tentative plan, envisaging the beginning to minimize the program in the second half of 2013, when the economic situation will continue to improve.
However, most of the major currencies held in the previous range, resting from the volatility that was observed last week. Many higher-yielding currencies of developing countries, which over the years have received support from the soft Fed policy, came under the pressure last week and fell to multi-year lows.