The euro showed mixed performance in early deals on Tuesday ahead of some major risk-events, including the Federal Reserve meeting tomorrow and the U.S. CPI due later in the global day.
The common currency moved in a bearish track against the Swiss franc ahead of Thursday's SNB rate decision, which is widely expected a status quo for the interest rate and the EUR/CHF 1.20 peg.
The European single unit outperformed among other major currencies, erasing much of its early morning losses following the ECB chief Mario Draghi's more or less dovish remarks.
Speaking at the farewell conference for Bank of Israel Governor Stanley Fischer in Jerusalem, the European Central Bank President Mario Draghi said that the central bank have not ruled out the possibility of negative deposit rates and other non-standard policy measures in the euro area.
"We will look with an open mind at these measures that are especially effective in our institutional setup and that fall within our mandate." Draghi said.
He also reiterated the warning that some of the non-standard measures could lead to unintended consequences. "This does not mean that they should not be used, but it does mean that we need to be aware of those consequences and manage them appropriately," the ECB official added.
After leaving interest rates unchanged earlier this month, Draghi did reveal that policymakers discussed the possibility of cutting the deposit rate below zero as well as measures to boost lending to small and medium-sized enterprises and steps to revive the market for asset-backed securities.
However, such unconventional options are "on the shelf" for now, he had said on June 6.
In economic news, Germany's investor confidence rose more-than-expected in June, after remaining largely unchanged in the previous month, results of a survey by the Mannheim-based Centre for European Economic Research/ZEW showed today.
The ZEW Indicator of Economic Sentiment climbed to 38.5 from 36.4 in May. Economists were looking for a score of 38.1. The latest reading is the highest since March.
Investors wait to hear what Fed Chairman Ben Bernanke will say on Wednesday when he briefs the media following the conclusion of the Fed's two-day policy meeting.
Bernanke may indicate that any reduction in the so-called quantitative-easing program will be data-driven and that slowing the pace of bond purchases over the next few months won't represent a tightening of monetary policy.
Elsewhere, the consumer price inflation in the UK accelerated more than expected in May, the latest figures from the Office for National Statistics showed today.
The rate of inflation rose to 2.7 percent in May from 2.4 percent in April, well-above the central bank's comfort zone of around 2.0 percent and more than economists' expectations for a 2.6 percent increase.
On a monthly basis, CPI rose 0.2 percent, at the same pace as in the previous month. Economists had forecast the index to rise 0.1 percent.
Separately, the statistical office reported that the output price inflation at British manufacturers rose to 1.2 percent in May from 0.9 percent in April. This, however, was below 1.4 percent expected by economists.
Japan's industrial production rose 0.9 percent in April from the previous month, revised down from a 1.7 percent growth reported in the preliminary report. On an annual basis, output fell 3.4 percent in April.
The euro rose to 0.8569 against the pound around 6:55 am ET, its strongest level thus far this month. The next bullish target for the currency cross is seen around the 0.8580 level and the likelihood for breaking that barrier could help the pair challenging the 0.86 area after a gap of 2-months.
The euro moved closer to the key 1.34 level against the US dollar in early deals on Tuesday, rising as high as 1.3398 around 5:10 am ET, its strongest mark since February 20. On the upside, the euro-greenback pair may find target around the 1.3435 area.
The shared currency climbed to a 4-day high of 127.71 against the yen around 6:25 am ET, improving from Monday's close of 126.27. If the euro-yen pair extends advance, the near-term resistance is seen around the 128.0 level.
On the flip-side, the euro erased much of its Asian session advance against the Swiss franc and dropped as much as 1.2291 before reversing its course briefly, around 5:10 am ET.
Extension of the bear-run could help the EUR/CHF pair re-testing the 1.2275 support, while any positive bounce could lead the pair moving back above the key 1.24 level after a gap of more than a week.
Traders are now focusing to data in the North American session on the U.S. inflation, housing starts and building permits -all for May for hints on Fed's timetable for economic stimulus.
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