Forex - EUR/USD weekly outlook: May 13 - 17

A A A - The euro fell to one-month lows against the broadly stronger dollar on Friday after recent strong U.S. employment data sparked speculation that the Federal Reserve may scale back its quantitative easing program.

EUR/USD hit session lows of 1.2936, the pair's lowest since April 5 before settling at 1.2990, 0.40% lower for the day and down 0.64% for the week.

The pair is likely to find support at 1.2900, the low of April 5 and resistance at 1.3050, Friday's high.

The greenback was boosted as recent strong U.S. employment data fuelled optimism over an earlier-than-expected end to the Fed's USD85 billion a month asset purchase program.

Data on Thursday showed that showed that U.S. initial jobless claims fell to the lowest level since January 2008 in the week ending May 4.

Earlier this month official data showed that the U.S. economy added more jobs than forecast in April, pushing the unemployment rate to a more than four-year low of 7.5%.

The dollar's broad based rally saw the currency advance to its highest level since October 2008 against the yen on Friday.

The dollar rose above 101 per yen after data showed that Japanese investors became net purchasers of overseas bonds in the past two weeks as the Bank of Japan's massive easing program prompted investors to seek out higher yields overseas to compensate for lower yields on Japanese government bonds.

The single currency rose to three-year highs against the yen, with EUR/JPY climbing to highs of 132.26, before settling at 132.01, up 0.58% for the day and gaining 1.60% for the week.

In the coming week, investors will be awaiting preliminary data from the euro zone and Japan on first quarter economic growth, as well as the ZEW report on German economic sentiment.

The U.S. is to release official data on retail sales, building permits, jobless claims and a closely watched report on consumer sentiment.

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

Monday, May 13

In the euro zone, Italy is to hold an auction of 10-year government bonds, while the eurogroup of finance ministers are to hold talks in Brussels.

Later in the day, the U.S. is to release official data on retail sales and business inventories.

Tuesday, May 14

The ZEW Institute is to release its closely watched report on German economic sentiment, a leading indicator of economic health. The euro zone is to release official data on industrial production. Meanwhile, the euro zone's Economic and Financial Affairs Council is to hold talks in Brussels.

The U.S. is to publish official data on import prices.

Wednesday, May 15

The euro zone is to release preliminary data on first quarter gross domestic product, the broadest indicator of economic activity and the leading measure of the economy's health. Germany, France and Italy are to release individual data on first quarter growth.

The U.S. is to release data on producer price inflation, industrial production, the capacity utilization rate and a report on manufacturing activity in New York State.

Thursday, May 16

The euro zone is to produce official data on consumer price inflation, which accounts for the majority of overall inflation, as well as data on the trade balance. France is to publish preliminary data on nonfarm payrolls.

The U.S. is to produce official data on building permits, the leading indicator of future construction activity as well as data on housing starts. The U.S. is also to release official data on consumer inflation, initial jobless claims and the Philly Fed manufacturing index.

Friday, May 17

The U.S. is to round up the week with preliminary data from the University of Michigan on consumer sentiment and inflation expectations. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Forex and Currencies

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