Investing.com - The euro rose to a three-week high against the U.S. dollar on Friday, as new hopes for progress in tackling the debt crisis in the euro zone boosted demand for the single currency, while Federal Reserve easing expectations weighed on the greenback.
EUR/USD hit 1.2389 on Friday, the pair’s highest since July 6; the pair subsequently consolidated at 1.2320 by close of trade on Friday, climbing 1.63% over the week.
The pair was likely to find support at 1.2188, the low of July 17 and resistance at 1.2400, the high of July 6.
The euro found support on Friday, following reports that European Central Bank President Mario Draghi is to meet with German central-bank head Jens Weidmann in the coming days to discuss steps to contain the debt crisis, including the purchase of Spanish and Italian bonds.
Risk sentiment had already strongly improved on Thursday, after Draghi said the ECB will do whatever is necessary to preserve the euro.
German Chancellor Angela Merkel and French President François Hollande vowed to defend the euro in a joint statement on Friday and said that they are "deeply committed to the integrity of the euro zone."
The comments came after the yield on Spanish 10-year bonds surged to a euro-era high of 7.7% on Wednesday, fuelling fears that the country would need a full-scale sovereign bailout, in addition to the rescue package agreed for its banks.
Also Friday, official data showed that Spain's unemployment rate rose slightly less-than-expected in the second quarter, ticking up to 24.6% from 24.4% in the previous quarter.
Analysts had expected Spain's unemployment rate to rise to 24.9% in the second quarter.
The euro’s gains were limited however, as uncertainty crept back into markets, dampening expectations for any imminent moves by the ECB.
Meanwhile, the greenback remained under pressure after preliminary data showed that the U.S. economy grew just 1.5% in the second quarter, as consumers slashed spending and businesses grew more cautious about hiring and investing.
The U.S. gross domestic product had grown by an upwardly revised 2.0% in the first quarter.
The data came amid growing speculation the U.S. central bank may announce another round of easing measures at its next policy meeting, following a string of mixed U.S. economic reports earlier in the week.
In the week ahead, investors will continue to keep a close eye on developments in the euro zone, as well as monetary policy decisions by the Federal Reserve, the ECB and the Bank of England.
In addition, Friday’s data on U.S. non-farm payrolls will be highly anticipated as market participants attempt to gauge the strength of the country’s economic recovery.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, July 30
In the euro zone, Spain is to release preliminary second quarter GDP, the broadest measure of economic activity and the primary gauge of the economy’s health.
Meanwhile, Italy is to hold an auction of 10-year government bonds.
Tuesday, July 31
The euro zone is to release preliminary data on consumer price inflation, which accounts for the majority of overall inflation, as well as official data on the unemployment rate. Meanwhile, Germany is to release official data on retail sales and unemployment change, while France is to release data on consumer spending.
The U.S. is to publish official data on personal consumption expenditures price inflation, as well as on employment costs and personal spending. The country is also to release the Standard & Poor's / Case-Shiller house price inflation report, followed by Chicago’s purchasing managers’ index and industry data on consumer confidence.
Wednesday, August 1
In the euro zone, Spain and Italy are to release data on manufacturing sector growth.
Also Wednesday, the U.S. is to produce data on non-farm employment change, as well as a report on crude oil stockpiles. The Institute for Supply Management is to produce a report on manufacturing activity.
In addition, the Federal Reserve is to announce its benchmark interest rate. The announcement is to be accompanied by the central bank’s rate statement, which discusses the factors affecting the bank’s policy decision and the economic outlook.
Thursday, August 2
In the euro zone, the ECB is to announce its benchmark interest rate. The announcement is to be followed by a press conference with central bank president Mario Draghi to discuss the factors affecting the bank’s policy decision and the economic outlook.
Later Thursday, U.S. is to release government data on initial jobless claims and factory orders, a leading indicator of production.
Friday, August 3
The euro zone is to release official data on retail sales.
The U.S. is to round up the week with government data on non-farm employment change and the country’s unemployment rate, followed by official data on average hourly earnings, as well as an ISM report on non-manufacturing activity.
EUR/USD hit 1.2389 on Friday, the pair’s highest since July 6; the pair subsequently consolidated at 1.2320 by close of trade on Friday, climbing 1.63% over the week.
The pair was likely to find support at 1.2188, the low of July 17 and resistance at 1.2400, the high of July 6.
The euro found support on Friday, following reports that European Central Bank President Mario Draghi is to meet with German central-bank head Jens Weidmann in the coming days to discuss steps to contain the debt crisis, including the purchase of Spanish and Italian bonds.
Risk sentiment had already strongly improved on Thursday, after Draghi said the ECB will do whatever is necessary to preserve the euro.
German Chancellor Angela Merkel and French President François Hollande vowed to defend the euro in a joint statement on Friday and said that they are "deeply committed to the integrity of the euro zone."
The comments came after the yield on Spanish 10-year bonds surged to a euro-era high of 7.7% on Wednesday, fuelling fears that the country would need a full-scale sovereign bailout, in addition to the rescue package agreed for its banks.
Also Friday, official data showed that Spain's unemployment rate rose slightly less-than-expected in the second quarter, ticking up to 24.6% from 24.4% in the previous quarter.
Analysts had expected Spain's unemployment rate to rise to 24.9% in the second quarter.
The euro’s gains were limited however, as uncertainty crept back into markets, dampening expectations for any imminent moves by the ECB.
Meanwhile, the greenback remained under pressure after preliminary data showed that the U.S. economy grew just 1.5% in the second quarter, as consumers slashed spending and businesses grew more cautious about hiring and investing.
The U.S. gross domestic product had grown by an upwardly revised 2.0% in the first quarter.
The data came amid growing speculation the U.S. central bank may announce another round of easing measures at its next policy meeting, following a string of mixed U.S. economic reports earlier in the week.
In the week ahead, investors will continue to keep a close eye on developments in the euro zone, as well as monetary policy decisions by the Federal Reserve, the ECB and the Bank of England.
In addition, Friday’s data on U.S. non-farm payrolls will be highly anticipated as market participants attempt to gauge the strength of the country’s economic recovery.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, July 30
In the euro zone, Spain is to release preliminary second quarter GDP, the broadest measure of economic activity and the primary gauge of the economy’s health.
Meanwhile, Italy is to hold an auction of 10-year government bonds.
Tuesday, July 31
The euro zone is to release preliminary data on consumer price inflation, which accounts for the majority of overall inflation, as well as official data on the unemployment rate. Meanwhile, Germany is to release official data on retail sales and unemployment change, while France is to release data on consumer spending.
The U.S. is to publish official data on personal consumption expenditures price inflation, as well as on employment costs and personal spending. The country is also to release the Standard & Poor's / Case-Shiller house price inflation report, followed by Chicago’s purchasing managers’ index and industry data on consumer confidence.
Wednesday, August 1
In the euro zone, Spain and Italy are to release data on manufacturing sector growth.
Also Wednesday, the U.S. is to produce data on non-farm employment change, as well as a report on crude oil stockpiles. The Institute for Supply Management is to produce a report on manufacturing activity.
In addition, the Federal Reserve is to announce its benchmark interest rate. The announcement is to be accompanied by the central bank’s rate statement, which discusses the factors affecting the bank’s policy decision and the economic outlook.
Thursday, August 2
In the euro zone, the ECB is to announce its benchmark interest rate. The announcement is to be followed by a press conference with central bank president Mario Draghi to discuss the factors affecting the bank’s policy decision and the economic outlook.
Later Thursday, U.S. is to release government data on initial jobless claims and factory orders, a leading indicator of production.
Friday, August 3
The euro zone is to release official data on retail sales.
The U.S. is to round up the week with government data on non-farm employment change and the country’s unemployment rate, followed by official data on average hourly earnings, as well as an ISM report on non-manufacturing activity.