Forexpros – The euro trimmed gains against the U.S. dollar on Thursday, pulling back from a two-month high as worries that the euro zone may slide into a recession offset data indicating an improvement in the U.S. labor market.
EUR/USD pulled back from 1.3342, the pair’s highest since December 12, to hit 1.3292 during U.S. morning trade, still up 0.32% on the day.
The pair was likely to find support at 1.3171, Monday’s low and resistance at 1.3320, the high of February 9 and a two-month high.
Sentiment on the single currency was dented after the European Commission forecast 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 strengthened broadly earlier in the session, after an index of German business confidence improved more-than-expected in February, fuelling hopes that the euro zone’s largest economy was weathering the impact of the debt crisis in the region.
In the U.S., a report by the Department of Labor showed that the number of individuals filing for initial jobless benefits in the week ending February 18 held steady at 351,000, confounding expectations for an increase of 3,000 to 354,000.
Jobless claims have remained below 400,000, a level historically associated with an improving labor market, in 15 of the past 17 weeks.
The euro was modestly higher against the pound and the yen, with EUR/GBP up 0.17% to hit 0.8469 and EUR/JPY adding 0.27% to hit 106.66.
Also Thursday, Greece’s parliament approved a debt swap agreement with private bondholders, a vital step needed to secure a EUR130 billion bailout package.
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