Forexpros – Last week saw the euro drop to a six-week low against its U.S. counterpart before trimming some of the week’s losses as speculation that the European Central Bank may move to help the region’s struggling economies strengthened market sentiment.
EUR/USD hit 1.3421 on Thursday, the pair’s lowest since October 10; the pair subsequently consolidated at 1.3522 by close of trade on Friday, plummeting 2.07% over the week.
The pair is likely to find support at 1.3377, the low of October 10 and resistance at 1.3652, the high of November 10.
The single currency rallied to a three day high against the greenback on Friday, amid speculation that the European Central Bank is considering lending to the International Monetary Fund to bail out troubled euro zone economies.
In Italy, newly-appointed Prime Minister Mario Monti won a parliamentary confidence vote, giving him a mandate to begin drafting his agenda, which includes broader structural reforms.
Following the vote, Italian bond yields found support, falling back below the 7% threshold widely seen as unsustainable for borrowing in the long term. Spanish bond yields also eased after rising close to 7% at a government bond auction earlier in the week, as the ECB purchased Italian and Spanish government debt.
Also Friday, official data showed that German producer price inflation rose more-than-expected in October, ticking up 0.2% after a 0.3% increase the previous month. Analysts had expected German PPI to rise 0.1% in October.
But the euro’s gains were limited as investors remained concerned over the handling of the financial crisis in the single currency bloc, ahead of national elections in Spain on Sunday.
Speaking in Frankfurt, European Central Bank President Mario Draghi pushed back against politicians and investors asking him to do more to end the sovereign debt crisis, expressing impatience with leader’s failure to act.
The euro rose briefly against the greenback on Thursday, after upbeat U.S. reports on housing and employment. Government data showed that U.S. building permits rose to the highest level since March 2010 in October, while U.S. housing starts were largely unchanged.
A separate report revealed that the number of people who filed for unemployment assistance in the U.S. in the week ending November 11 fell by 5,000 to a seven-month low of 388,000.
In the week ahead, investors will be keeping a close eye on developments within the euro zone. Meanwhile, U.S. data on third quarter growth and durable goods orders will be closely watched, in order to gauge the strength of the country’s economic recovery.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, November 21
The euro zone is to publish official data on the current account.
Later in the day, the U.S. is to release industry data on existing home sales.
Tuesday, November 22
The euro zone is to publish a report on consumer confidence.
Later Tuesday, the U.S. is to release preliminary data on gross domestic product, the broadest measure of economic activity and the leading indicator of the economy’s health. In addition, the U.S. Federal Reserve is to publish the minutes of its November policy meeting.
Wednesday, November 23
The euro zone is to produce preliminary data on manufacturing and service sector growth, while France and Germany are to publish individual reports. The single currency bloc is also to publish official data on industrial new orders, a leading indicator of production.
The U.S. is to publish a string of economic data, including a government report on durable goods orders, a leading indicator of production. The country is also to publish its weekly report on initial jobless claims, in addition to data on crude oil stockpiles, inflation, personal income and personal spending. Meanwhile, the University of Michigan is to release revised data on inflation expectations and consumer sentiment.
Thursday, November 24
In the euro zone, Germany is to release revised data on third quarter GDP. Meanwhile, the Ifo Institute for Economic Research is to publish a report on German business climate, a leading indicator of economic health.
Also Thursday, markets in the U.S. are to remain closed for the Thanksgiving holiday.
Friday, November 25
Germany is to publish official data on import prices, while Italy is to release government data on retail sales.
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