Federal Reserve Chairman Ben Bernanke spent a second day testifying before Congress, offering not hint as to if or when the economy would need monetary stimulus, reiterating that Fed will stand by if needed.
In Asian trading on Thursday, EUR/USD was trading up 0.02% at 1.2287, up from a low of 1.2277 and off from a high of 1.2288 in a tug-of-war session.
The pair was likely to find support at 1.2245, the low from July 15, and resistance at 1.2316, the high from July 17.
The dollar initially gained against the euro on solid U.S. housing data, which put to rest talk the Federal Reserve will stimulate the economy.
Housing starts jumped 6.9% in June to a seasonally-adjusted annual rate of 760,000 units, a near four-year high and well above expectations for a gain of 5.2% to 745,000 units.
Housing starts for May were revised up to 711,000 units from a previously reported 708,000 units.
Building permits issued in June dropped 3.7% to a seasonally adjusted 755,000, worse than expectations for a decline of 2.4% to 765,000.
Building permits issued in May totaled 784,000.
Housing threw the U.S. economy into the worst downturn since the Great Depression and continues to weigh on its recovery.
Meanwhile, Fed Chairman Ben Bernanke spent a second day testifying in front of Congress earlier, offering little to suggest the economy was closer to needing a jolt of stimulus.
The news sparked demand for dollar, which weakened in recent days on growing talk poor monthly jobs reports and consumer demand data would prompt the Fed to stimulate the economy via quantitative easing measures, which weaken the dollar in exchange for more a more robust jobs market and price stability.
The Fed Beige Book, a group of economic summaries, predicted modest recovery as well.
Meanwhile, German Chancellor Angela Merkel said earlier she still harbors doubts as to whether the European project would work though she said she would remain optimistic it would.
High borrowing costs in southern European nations pressured the euro lower as well.
The yield on Spanish 10-year bonds hit 6.93%, nearing the 7% threshold branded by markets as unsustainable and typical of a country in need of a bailout.
Germany, meanwhile, sold at auction more than EUR4 billion in two-year government bonds at negative yields, reflecting increasing investor unease over the debt crisis in the region.
Still, second-quarter earnings in the U.S. surprised on the upside, which prompted some investors to sell dollars and snap up higher-yielding equities.
The euro, meanwhile, was up against the pound and down against the yen, with EUR/GBP up 0.04% at 0.7849 and EUR/JPY trading down 0.09% at 96.70.
Later Thursday, the U.S. will release data on initial jobless claims as well as numbers on existing home sales and manufacturing activity in the Philadelphia area.
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