Investing.com - The euro rose to its highest level against the U.S. dollar since May on Friday, amid optimism over progress on resolving the debt crisis, while fresh easing measures from the Federal Reserve pinned down the dollar.
EUR/USD hit 1.3174 on Friday, the pair’s highest since May 2; the pair subsequently consolidated at 1.3161 by close of trade, up 2.07% for the week.
The pair is likely to find support at 1.2994, the low of December 12 and resistance at 1.3283, the high of May 1.
The dollar weakened broadly on Friday after weak U.S. inflation data warranted continued monetary easing by the Federal Reserve.
The Department of Labor said U.S. consumer inflation fell 0.3% in November, down for the first time in six months on the back of lower gasoline prices, bringing the annualized rate of inflation to 1.8%.
The Federal Reserve said Wednesday that interest rates would remain close to zero as long as inflation forecasts remain near the bank’s 2% target and until the U.S. unemployment rate declines to 6.5% or less.
The U.S. central bank also said it would continue to purchase USD85 billion a month of government bonds and mortgage based securities in order to shore up the economic recovery.
This overshadowed concerns over the U.S. fiscal cliff, approximately USD600 billion of automatic tax hikes and spending cuts due to take effect on January 1 which investors’ fears could derail the U.S. recovery, if lawmakers cannot reach an agreement.
Demand for the single currency was underpinned by optimism over signs of headway in dealing with the debt crisis in the euro zone after finance ministers agreed a deal on rules for supervising the region’s banks.
Ministers also released EUR49.1 billion of financial aid for Greece, after the country completed a scheme to buy back its debt from private investors last week.
In the week ahead, investors will be continuing to monitor the progress on talks in Washington on the fiscal cliff. Market participants will also be watching developments in the euro zone.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, December 17
The U.S. is to publish official data on manufacturing activity in New York State, a leading indicator of economic health, as well as a report on the balance of domestic and foreign investment in U.S. securities.
Tuesday, December 18
The U.S. is to produce government data on the current account.
Wednesday, December 19
The euro zone is to produce official data on the current account, while the Ifo Institute is to release a report on German business climate.
The U.S. is to publish government data on building permits, an excellent gauge of future construction activity, as well as data on housing starts. The country is also to release official data on crude oil stockpiles.
Thursday, December 20
In the euro zone, Germany is to release official data on producer price inflation.
The U.S. is to release the weekly report on initial jobless claims, as well as revised data on third quarter growth and a report on manufacturing activity in Philadelphia. In addition, the U.S. is to publish industry data on existing home sales, a leading indicator of economic health.
Friday, December 21
The euro zone is to release a report on German consumer climate, a leading indicator of consumer spending.
The U.S. is to round up the week with revised data on consumer sentiment from the University of Michigan, as well as government data on personal income and spending.
EUR/USD hit 1.3174 on Friday, the pair’s highest since May 2; the pair subsequently consolidated at 1.3161 by close of trade, up 2.07% for the week.
The pair is likely to find support at 1.2994, the low of December 12 and resistance at 1.3283, the high of May 1.
The dollar weakened broadly on Friday after weak U.S. inflation data warranted continued monetary easing by the Federal Reserve.
The Department of Labor said U.S. consumer inflation fell 0.3% in November, down for the first time in six months on the back of lower gasoline prices, bringing the annualized rate of inflation to 1.8%.
The Federal Reserve said Wednesday that interest rates would remain close to zero as long as inflation forecasts remain near the bank’s 2% target and until the U.S. unemployment rate declines to 6.5% or less.
The U.S. central bank also said it would continue to purchase USD85 billion a month of government bonds and mortgage based securities in order to shore up the economic recovery.
This overshadowed concerns over the U.S. fiscal cliff, approximately USD600 billion of automatic tax hikes and spending cuts due to take effect on January 1 which investors’ fears could derail the U.S. recovery, if lawmakers cannot reach an agreement.
Demand for the single currency was underpinned by optimism over signs of headway in dealing with the debt crisis in the euro zone after finance ministers agreed a deal on rules for supervising the region’s banks.
Ministers also released EUR49.1 billion of financial aid for Greece, after the country completed a scheme to buy back its debt from private investors last week.
In the week ahead, investors will be continuing to monitor the progress on talks in Washington on the fiscal cliff. Market participants will also be watching developments in the euro zone.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, December 17
The U.S. is to publish official data on manufacturing activity in New York State, a leading indicator of economic health, as well as a report on the balance of domestic and foreign investment in U.S. securities.
Tuesday, December 18
The U.S. is to produce government data on the current account.
Wednesday, December 19
The euro zone is to produce official data on the current account, while the Ifo Institute is to release a report on German business climate.
The U.S. is to publish government data on building permits, an excellent gauge of future construction activity, as well as data on housing starts. The country is also to release official data on crude oil stockpiles.
Thursday, December 20
In the euro zone, Germany is to release official data on producer price inflation.
The U.S. is to release the weekly report on initial jobless claims, as well as revised data on third quarter growth and a report on manufacturing activity in Philadelphia. In addition, the U.S. is to publish industry data on existing home sales, a leading indicator of economic health.
Friday, December 21
The euro zone is to release a report on German consumer climate, a leading indicator of consumer spending.
The U.S. is to round up the week with revised data on consumer sentiment from the University of Michigan, as well as government data on personal income and spending.