Forexpros – The euro trimmed gains against the U.S. dollar on Thursday, as a downbeat assessment of the outlook for economic growth in the euro zone overshadowed better-than-expected German business confidence data.
EUR/USD pulled back from 1.3342, the pair’s highest since December 12, to hit 1.3293 during European afternoon trade, still up 0.32%.
The pair was likely to find support at 1.3186, the low of February 21 and resistance at 1.3381, the high of December 12.
The single currency pulled away from a two-month high against the greenback after the European Commission’s forecast for economic growth showed that the euro zone’s economy would contract by 0.3% in the first quarter after dropping by the same amount in the last quarter of 2011. Two consecutive quarters of contraction signal a recession.
The euro found support earlier after German research institute Ifo said its Business Climate Index rose to a seasonally adjusted 109.6 in February from a reading of 108.3 the previous month, surpassing expectations for an increase to 108.8.
The data fuelled hopes that the euro zone’s largest economy was weathering the impact of the debt crisis in the region and may avoid slipping into a recession.
Meanwhile, uncertainty over Greece’s ability to implement austerity measures needed to qualify for a EUR130 billion bailout package and avoid defaulting on its debt continued to weigh on risk appetite.
The euro was fractionally higher against the pound with EUR/GBP edging up 0.05%, to hit 0.8460.
Later in the day, the U.S. was to produce government data on initial jobless claims.
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