Investing.com

Investing.com - The euro moved higher against the dollar on Tuesday, but gains were held in check after the European Central Bank recently stepped up warnings over the strength of the single currency.



EUR/USD was last up 0.17% to 1.3815, recovering from the two-week lows of 1.3784 struck earlier in the session.



The pair was likely to find support at 1.3775 and resistance at 1.3865.



Demand for the common currency remained subdued after ECB President Mario Draghi warned earlier this month that further gains in the euro would trigger additional monetary easing to keep inflation from falling.



The annual rate of euro zone inflation slowed to 0.5% in March, the lowest since November 2009.



Euro zone inflation has now been in the ECB’s danger zone of below 1% for six straight months, adding to pressure on policymakers to implement fresh stimulus measures to shore up the fragile recovery in the region.



On Tuesday, ECB Executive Board member Benoit Coeure said the bank still had room to lower its key interest rates.



“We have several instruments in the event that it is necessary to loosen monetary policy. We still have room to cut the key interest rate," he said.



Coeure also said the strong euro "risks slowing the return of inflation to a level close to and below 2%, which is our definition of price stability." He said it was "certain" that appreciation of the euro since mid-2012 had contributed to the low level of current inflation.



The euro edged higher against the yen, with EUR/JPY inching up 0.09% to 141.67.



Elsewhere, the euro was little changed close to two-month lows against the pound, with EUR/GBP dipping 0.02% to 0.8211.



Demand for sterling continued to be underpinned after data last week showing that the U.K. unemployment rate fell to a five year low in the three months to February fuelled expectations for a rate hike by the Bank of England in the first quarter of next year.





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