The euro strengthened against its major counterparts in the European session on Tuesday, while the U.S. dollar lost ground, after the General Services Administration told U.S. President-elect Joe Biden to begin the formal transition, recognizing him as winner of the election.
The move eased political uncertainty and enable Biden’s team to obtain funding, access to government data and other assistance.
Biden is expected to pick former Federal Reserve Chair Janet Yellen as Treasury Secretary, a pivotal role in which she would help shape and direct his economic policies.
Encouraging developments related to coronavirus vaccines and a possible easing of lockdowns in France helped underpin investor sentiment.
Investors await U.S. economic reports on home prices and consumer confidence due later in the day.
In economic releases, revised data from Destatis showed that the German economy rebounded at a faster than expected pace in the third quarter, offsetting a large part of the massive contraction in the second quarter.
GDP grew 8.5 percent sequentially in the third quarter, reversing the 9.8 percent decline in the second quarter caused by the coronavirus pandemic, following the relaxation of Covid-19 restrictions.
The euro advanced to a 1-week high of 123.96 against the yen and near a 3-month high of 1.0850 against the franc, compared to its previous lows of 123.55 and 1.0797, respectively. The next possible resistance for the euro is seen around 125.00 against the yen and 1.10 against the franc.
The euro spiked up to 0.8909 against the pound and 1.5499 against the loonie, off its early low of 0.8875 and near a 2-week low of 1.5451, respectively. The euro is likely to challenge resistance around 0.92 against the pound and 1.58 against the loonie.
The single currency recovered to 1.6177 versus the aussie and 1.7019 versus the kiwi, from more than a 4-month low of 1.6123 and more than a 9-month low of 1.6947, respectively seen in early deals. On the upside, 1.66 and 1.74 are possibly seen as its next resistance levels versus the aussie and the kiwi, respectively.
The greenback weakened to 1.1894 against the euro and 1.3380 against the pound, after rising to 1.1833 and 1.3312, respectively in early deals. Next key support for the greenback is seen around 1.20 against the euro and 1.35 against the pound.
Pulling away from an 8-day high of 104.65 hit at 7:00 pm ET, the greenback dropped to 104.15 against the yen. Should the greenback continues its downtrend, 100.00 is likely seen as its next support level.
The greenback depreciated to near a 2-week low of 1.3011 against the loonie, 2-1/2-year low of 0.7005 versus the kiwi and near a 3-month low of 0.7368 versus the aussie, reversing from its early highs of 1.3085, 0.6916 and 0.7283, respectively. The greenback is poised find support around 1.27 against the loonie, 0.72 versus the kiwi and 0.75 versus the aussie.
In contrast, the greenback moved up to 0.9132 against the franc, after having dropped to 0.9098 at 4:30 am ET. The greenback is seen finding resistance around the 0.92 area.
U.S. consumer confidence index for November and FHFA’s house price index and S&P/Case-Shiller home price index for September are scheduled for release in the New York session.