Investing.com - The euro pared gains against the dollar on Thursday, easing back from three-week highs, but the dollar remained under pressure after data on Wednesday showed that the U.S. economy grew far more slowly than forecast in the first quarter.
EUR/USD was last trading at 1.3874, after rising as high as 1.3889 earlier, the strongest level since April 11.
The pair was likely to find support at 1.3825 and resistance at 1.3900.
The dollar remained on the back foot after data on Wednesday showed that the U.S. economy expanded at an annual rate of just gross domestic product grew at an annual rate of 0.1% in the first quarter, well below forecasts for an expansion of 1.2%.
Despite the sharp slowdown in growth the Federal Reserve said Wednesday it would reduce its bond purchases to $45 billion a month, in a widely expected decision. The Fed also said interest rates would remain on hold at record lows for a "considerable time" after the bond-buying program ends later this year.
The U.S. central bank acknowledged that first quarter growth was far weaker than expected, but added that growth had started to pick up in recent weeks.
The weak U.S. growth data helped the euro rebound from three-week lows against the dollar on Wednesday.
Concerns that the euro zone is falling into deflation persisted after preliminary data on Wednesday showed that the annual rate of inflation ticked up to 0.7% in April, but still remained well below the European Central Bank’s target of close to but just below 2%.
The slight uptick in consumer prices did ease pressure on the ECB to implement further monetary easing measures to tackle low inflation in the region.
Investors were turning their attention to the April nonfarm payrolls report due for release on Friday, which was expected to show that the recovery in the labor market was continuing.
Elsewhere, the euro was slightly higher against the yen, with EUR/JPY edging up to 141.93 from 141.73 on Wednesday.
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