Investing.com - The euro rose to more than one week highs against the dollar on Friday after far weaker-than-forecast U.S. employment data for December raised doubts over the outlook for the economic recovery.
EUR/USD rose to 1.3686, the highest level since January 2 and was last up 0.45% to 1.3668. For the week, the pair gained 0.29%.
The pair is likely to find support at 1.3552, the low of January 8 and resistance at 1.3700.
The dollar turned broadly lower after the Labor Department said the U.S. economy added 74,000 jobs in December, the smallest increase since January 2011 and well below expectations for 196,000 new jobs.
The unemployment rate fell to a five year low of 6.7% from 7% in November, but this was due in part to people dropping out of the labor force. The labor participation rate fell to an almost 35-year low of 62.8%.
Inclement weather in December contributed to the slowdown in hiring, as the construction sector cut 16,000 jobs, the biggest drop in the industry in 20 months.
The unexpectedly weak data tempered expectations that the Federal Reserve would cut its stimulus program again this month. The Fed cited a stronger labor market in its decision to cut its asset purchase program by USD10 billion in December, reducing it to USD75 billion-a-month.
The euro’s gains were held in check after European Central Bank President Mario Draghi reiterated the bank’s forward guidance on rates on Thursday, saying monetary policy will remain accommodative for as long as necessary.
The comments came after the ECB left interest rates on hold at 0.25% at its first policy meeting of the year.
Meanwhile, the CFTC Commitments of Traders report for the week ending January 7 showed that net long euro positions were cut in half, falling from 30,600 contracts to 14,500.
In the week ahead, investors will be closely watching U.S. data on retail sales, inflation and consumer sentiment, as well as speeches by two Federal Reserve officials on Tuesday.
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.
Tuesday, January 14
The euro zone is to publish data on industrial production, a leading indicator of economic health.
The U.S. is to produce data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. The nation is also to release data on import prices and business inventories. Also Tuesday, Federal Reserve Bank of Philadelphia President Charles Plosser and Dallas Fed President Richard Fisher are to speak.
Wednesday, January 15
The U.S. is to release data on producer price inflation and a report on manufacturing activity in the New York region.
Thursday, January 16
The euro zone is to release data on consumer inflation, while Spain is to hold an auction of 10-year sovereign bonds.
The U.S. is to publish reports on consumer price inflation and initial jobless claims, in addition to data on manufacturing activity in Philadelphia. Meanwhile, Federal Reserve Chairman Ben Bernanke is to speak at an event in Washington.
Friday, January 17
The U.S. is to wrap up the week with the closely watched preliminary reading of the University of Michigan consumer sentiment index. The U.S. is also to release data on building permits, housing starts and industrial production.