Forex - EUR/USD close to 2-month high on ECB hopes

Forexpros - The euro was trading close to a two-month high against the U.S. dollar on Thursday, buoyed up by expectations that the European Central Bank will announce measures to stem the region’s debt crisis after its policy meeting later in the day.

EUR/USD hit 1.2630 during late Asian trade, the pair’s highest since August 31; the pair subsequently consolidated at 1.2627, gaining 0.22%.

The pair was likely to find support at 1.2500, Wednesday’s low and near-term resistance at 1.2679, the high of July 2.

Demand for the euro has been underpinned in recent weeks by expectations that the ECB will announce more details of measures to help stabilize the region’s sovereign debt markets during its post-policy policy meeting press conference later in the day.

Expectations were boosted on Wednesday, after Bloomberg reported that the ECB is planning unlimited purchases of government bonds with maturities of up to three years, without setting bond yield targets.

The single currency shrugged off data on Wednesday showing that service sector activity in the bloc contracted at a slightly faster rate than initially estimated in August, adding to fears that the bloc is set to enter a technical recession in the third quarter.

The euro was higher against the pound and the yen, with EUR/GBPrising 0.15% to 0.7934 and EUR/JPY climbing 0.20% to 98.96.

Also Thursday, Germany was to release a report on factory orders.

The U.S. was to release a report on ADP non-farm employment payrolls, followed by weekly government data on unemployment claims. The country was also to release a report by the Institute for Supply Management on service sector activity.