Euro supported by US easing hopes

The euro moved up versus the dollar on Wednesday following Federal Reserve Chairman Ben Bernanke’s announcement that the central bank is prepared to support the US economy, but gains remained limited as Bernanke gave little away about specific steps.

The Fed chief is scheduled to address the House Financial Services Committee on Wednesday, after his testimony to the Senate Banking Committee yesterday.

The single currency seesawed overnight, first falling on the back of Bernanke’s testimony, but then climbing to session highs; it later continued its upward trajectory during early Asian trading. It last stood at $1.2293, below the high hit on Tuesday of $1.2317 but well above a two-year low hit last week of $1.2162.

Bernanke said that the central bank is prepared to offer further stimulus if needed but did not go as far to say action was likely in the near future. He said that the US economic recovery is being hindered by uncertainty over the US fiscal policy and Europe’s debt crisis.

Meanwhile, minutes from the Reserve Bank of Australia’s July meeting showed that the country’s central bank opted against cutting interest rates after data revealed the domestic economy had gained more momentum than originally thought. The Aussie moved marginally higher at $1.0311, close to resistance at $1.0311, the 5 July high.