The euro recovered on Tuesday, lifted by demand from Asian central banks, and buying against the Australian dollar, after a Chinese interest rate hike fueled concerns over its growth, as well as demand for commodities. As a result, the EUR gained 0.3% versus the greenback to $1.3630 as investors booked profits on long dollar positions taken in the last four days. The 17-nation common currency experienced similar behavior against the GBP and closed at 0.8480.
Gains in the euro were muted after a weaker-than-expected reading of German industrial output for December on Tuesday. That followed a dismal industrial orders report the previous day, leading to a sell-off in the common currency and a two-week low of $1.3507 against the USD.
Investors may look for the unusual price volatility to continue in the EUR/USD as the pair attempts to stabilize and find new support and resistance lines. Large price jumps such as these are not commonplace and present terrific opportunities to take advantage of the price swings for large profitable gains.