Forex - EUR/USD holds gains after Bernanke remarks, ISM data

Forex Pros – The euro held gains against the U.S. dollar on Tuesday, after the chairman of the Federal Reserve said that the U.S. recovery was gathering momentum and following data showing that manufacturing activity in the U.S. rose to the highest level since May 2004 in February.

EUR/USD hit 1.3853 during European late afternoon trade, the daily high; the pair subsequently consolidated at 0.3821, gaining 0.11%.

The pair was likely to find support at 1.371, Monday's low and short-term resistance at 1.3860, the high of February 2 and a three-month high.

In a report before the Senate Banking Committee in Washington, Fed chair Ben Bernanke said that he saw increasing evidence that the U.S. economic recovery was becoming self-supporting but he warned that employment growth remained weak.

Bernanke said downside risks to growth had diminished, and said for the first time that the risk of deflation, a key justification for quantitative easing, was now "negligible."

Meanwhile, the Institute for Supply Management said its index of purchasing managers rose to 61.4 in February, after rising to 60.8 the previous month, surpassing expectations for a rise to 60.9.

On the index, a reading above 50.0 indicates industry expansion.

The euro was also higher against the pound, with EUR/GBP easing up 0.04% to hit 0.8495.

Earlier in the day, data showed that the euro zone's manufacturing sector grew at the fastest pace in almost 11 years in February, driven by a record expansion in Germany.

A separate preliminary report showed that consumer price inflation in the euro zone rose 2.4% in February, to hit its highest level since October 2008.

ForexPros.com - Forex Pros offers a diverse set of professional tools for Forex, Futures and CFDs. These include real-time data streams, technical and fundamental analysis by in-house experts, and a widely used economic calendar and

.