Investing.com
- The euro dropped to six-week lows against the broadly stronger dollar
on Friday after better-than-expected U.S. consumer sentiment data
fuelled speculation that the Federal Reserve may start to scale back its
easing policies this year.
EUR/USD hit 1.2796, the pair’s lowest since April 4, before trimming back losses to settle at 1.2834, down 0.37% for the session and 1.2% lower for the week.
The pair is likely to find support at 1.2750, the low of March 27 and resistance at 1.2888, Friday’s high.
The University of Michigan said its consumer sentiment index jumped to 83.7 in May, its highest level since 2007, from 76.4 in the preceding month, outstripping expectations for a reading of 78.0.
A separate report by the Conference Board showed that its index of leading economic indicators rose 0.6% in April, more than double the 0.2% increase expected by economists.
The robust data bolstered speculation over a possible near-term exit from the Federal Reserve’s USD85 billion a month asset purchase program.
The data came after a series of economic data releases on Thursday raised doubts over the strength of the U.S. economic recovery.
Official data showed that consumer price inflation and housing starts fell more-than-expected in April, while jobless claims posted the largest increase in six months.
The euro remained under pressure amid speculation that the European Central Bank is preparing to cut deposit rates into negative territory. The deposit rate is the rate paid by the ECB on overnight deposits by euro zone banks.
In the week ahead investors will be focusing on Wednesday’s Federal Reserve minutes, as well as testimony on the economic outlook and monetary policy by Fed Chairman Ben Bernanke.
Markets will also be watching euro zone data on manufacturing and service sector activity.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday as there are no relevant events on this day.
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