Forex - EUR/USD weekly outlook: June 3 - 7

Investing.com - The euro ended Friday’s session lower against the U.S. dollar, coming off a three-week high as demand for the greenback was bolstered by uncertainty over whether the Federal Reserve will scale back its easing program this year.

EUR/USD hit 1.3060 on Thursday, the strongest level since May 9, before trimming back gains to settle at 1.2995, 0.39% lower for the day but up 0.47% for the week.

The pair is likely to find support at 1.2932, Thursday’s low and resistance at 1.3060, Thursday’s high and a three-week high.

The University of Michigan said its consumer sentiment index rose to 84.5 in May, its highest level since July 2007, from76.4 in April and up from a preliminary estimate of 83.7.

A separate report showed that manufacturing activity in the Chicago-area improved at the fastest pace in over a year last month.

Market research group Kingsbury International said its Chicago purchasing managers’ index jumped to a seasonally adjusted 58.7 in May from a reading of 49.0 in April. Analysts expected a reading of 50.3

The robust data bolstered expectations that the Federal Reserve could begin to scale back its USD85 billion a month asset purchase program this year.

The upbeat reports came after the Commerce Department said U.S. consumer spending fell 0.2% in April, confounding expectations for a 0.2% increase, as personal income stagnated.

Meanwhile, the euro remained under pressure amid speculation on whether the European Central Bank will implement negative interest rates on deposits following the conclusion of its policy meeting next week.

Data on Friday showed that the euro zone unemployment rate rose to a record high 12.2% in April, from 12.1% in March, in line with expectations.

May inflation, meanwhile, stood at 1.4%, far below the European Central Bank's target of just below 2%.

The single currency rallied to a three-week high against the greenback on Thursday after data showed the U.S. economy grew slower-than-initially expected in the first quarter, dampening speculation over whether the Fed will unwind its easing program.

In the week ahead, market players will be focusing on the outcome of a policy meeting by the European Central Bank.

Investors will also be awaiting the release of Friday’s closely watched report on U.S. nonfarm payrolls for further hints regarding the direction of U.S. monetary policy.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, June 3

In the euro zone, Spain and Italy are to release data on manufacturing activity.

Later in the day, the Institute of Supply Management is to release data on manufacturing activity in the U.S., a leading indicator of economic health.

Tuesday, June 4

In the euro zone, Spain is to release official data on the change in the number of people unemployed, a leading indicator of economic health.

Later in the day, the U.S. is to release data on the trade balance, the difference in value between imports and exports.

Wednesday, June 5

The euro zone is to release official data on retail sales, while Spain and Italy are to release reports on service sector activity.

Meanwhile, the U.S. is to release the ADP nonfarm payrolls report on private sector job creation, as well as government data on factory orders and crude oil stockpiles.

In addition, the Institute of Supply Management is release data on U.S. service sector activity, a leading economic indicator.

Thursday, June 6

In the euro zone, Spain and France are to hold auctions of 10-year government bonds. Germany is to publish government data on factory orders, a leading indicator of production.

Later Thursday, the European Central Bank is to announce its benchmark interest rate. The announcement is to be followed by what will be a closely watched press conference with President Mario Draghi.

In addition, the U.S. is to release the weekly government report on initial jobless claims.

Friday, June 7

In the euro zone, Germany is to produce official data on the trade balance and industrial production, a leading economic indicator.

The U.S. is to round up the week with closely watched government data on nonfarm payrolls and the unemployment rate, as well as data on average hourly earnings.

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