Investing.com - The euro slid to two-month low against the dollar on Friday as U.S. data indicated that the Federal Reserve is likely to stick to its stimulus tapering plan, and concerns over the outlook for the euro zone economy weighed.
EUR/USD fell to 1.3517, the lowest level since November 25 and was last down 0.58% to 1.3539. For the week, the pair lost 0.94%.
The pair is likely to find support at 1.3450 and resistance at 1.3620, Friday’s high.
Sentiment on the euro was hit by concerns that the subdued inflation outlook may prompt the European Central Bank to ease monetary policy in order to safeguard the fragile recovery in the region.
In the U.S., data released on Friday showed that industrial production rose 0.3% in December, in line with expectations, rising for the fifth successive month.
Another report showed that U.S. housing starts fell 9.8% last month, more than the 8.3% decline forecast by analysts. U.S. building permits rose less-than-expected in December, but remained close to November’s five year highs.
Separately, data showed that the University of Michigan's consumer sentiment index ticked down to 80.4 in January from 82.5 in December. Analysts had expected the index to rise to 83.5.
Earlier in the week, data showed that U.S. retail sales posted a larger than expected gain in December.
The data indicated that while the recovery in the U.S. remains uneven, the economic outlook is continuing to improve. The dollar has strengthened broadly since the Fed announced its decision in December to scale back its asset purchase program, cutting it by USD10 million, to USD75 billion-per-month.
The weaker euro fell to almost one-year lows against sterling on Friday, with EUR/GBP dropping 1.00% to 0.8244.
In the week ahead, the euro zone is to produce preliminary data on manufacturing and service sector activity, as well as the closely watched ZEW German economic sentiment index. U.S. data on jobless claims and home sales will also be in focus.
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 Wednesday and Friday as there are no relevant events on these days.
Monday, January 20
Germany is to produce data on producer price inflation, while the Bundesbank is to publish its monthly report.
Markets in the U.S. are to remain closed for the Martin Luther King Day holiday.
Tuesday, January 21
The ZEW Institute is to release its closely watched report on German economic sentiment, a leading indicator of economic health.
Thursday, January 23
The euro zone is to release preliminary data on manufacturing and service sector activity, a leading indicator of economic health. Germany and France are also to release individual reports.
The U.S. is release the weekly report on initial jobless claims and a private sector report on existing home sales.