Investing.com - The euro edged higher against the dollar on Wednesday, as market sentiment brightened, but gains were capped by expectations that the Federal Reserve will continue to scale back stimulus measures at next week’s policy meeting.
EUR/USD hit 1.3580, the highest since January 17 and was last up 0.10% to 1.3575. The pair earlier fell to session lows of 1.3535.
The pair is likely to find support at 1.3515, Tuesday’s low and resistance at 1.3600.
Investor sentiment was boosted after the International Monetary Fund revised up its forecast for global economic growth on Tuesday to 3.7% form 3.6% in October.
Meanwhile, concerns over a credit crunch in China continued to ease after the central bank moved to inject liquidity into financial markets earlier in the week.
Demand for the dollar continued to be underpinned by expectations for a reduction to the Fed’s quantitative easing program at the conclusion of its upcoming policy meeting on January 29 to USD65 billion from the current USD75 billion.
The euro fell to one-year lows against the broadly stronger pound after data released on Wednesday showed that the U.K. unemployment rate fell more than expected. EUR/GBP hit 0.8181, the lowest since January 2012 and was last down 0.43% to 0.8193.
The Office for National Statistics said the U.K. unemployment rate fell to 7.1% in the three months to November, to stand just above the 7% level the Bank of England has said is its threshold for considering raising interest rates from their current record low of 0.5%.
It was the largest drop in unemployment since 1997 the ONS said. Analysts had expected the jobless rate to fall to 7.3% from 7.4% in the three months to October.
Elsewhere, the common currency edged higher against the yen, with EUR/JPY inching up 0.12% to 141.58, up from session lows of 104.02.
The yen briefly popped higher after the Bank of Japan kept monetary policy unchanged following its monthly policy meeting on Wednesday and maintained its assessment that the economy "has continued to recover moderately."