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Forex - EUR/USD firms as Cyprus banks reopen, U.S. GDP data supports

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Shutterstock photo - The euro firmed against the dollar on Thursday as Cypriot banks reopened for business amid relative calm after spending two weeks closed on holiday to prevent capital flight.

Softer-than-expected U.S. gross domestic product figures weakened the dollar and allowed the euro to make even further gains.

In U.S. trading on Thursday, EUR/USD was up 0.38% at 1.2827, up from a session low of 1.2755 and off from a high of 1.2845.

The pair was likely to find support at 1.2752, Wednesday's low, and resistance at 1.3048, Monday's high.

Demand for the euro held steady as banks in Cyprus reopened with strict capital controls in place.

Financial institutions on the island nation closed on March 16 amid fears of a bank run while bailout talks took place, though calmness held throughout the day as banks opened their doors, which gave the euro room to rise.

The single currency fell against the greenback in recent sessions after a EUR10 billion bailout package approved for the country called for the closure of Cyprus's second-largest lender, Laiki Bank.

Terms of the bailout guaranteed that Laiki bank accounts holding EUR100,000 or less will continue to be insured and likely shifted to another financial institution, though the fates of larger accounts remained up in the air, with depositors and bondholders facing heavy losses.

Investors still remained wary that future bailouts in larger eurozone states may also target bank depositors and senior bondholders, which kept trading cautious on Thursday as did German employment data.

Germany's Federal Statistics Office reported earlier that the number of unemployed people rose by 13,000 in March, defying expectations for a decline of 4,000.

Germany's unemployment rate, meanwhile, held steady at 6.9% in March, in line with expectations.

U.S. growth and weekly jobless claims numbers also bolstered demand for the euro.

The U.S. Commerce Department reported earlier that the country's gross domestic product expanded by 0.4% in the fourth quarter of last year, missing market forecasts for a 0.5% expansion.

The growth rate was the slowest since the first quarter of 2011, though the figure did outpace initial estimates for growth of 0.1%.

Elsewhere, the U.S. Labor Department reported that the number of people filing for initial jobless claims rose by 16,000 to 357,000 last week, defying market calls for a drop of 1,000 to 340,000.

The euro, meanwhile, was up against the pound and down against the yen, with EUR/GBP trading up 0.08% at 0.8455, and EUR/JPY trading down 0.02% at 120.68.

On Friday, the U.S. will release official data on personal spending and expenditure and revised data from the University of Michigan on consumer sentiment. - 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 Nasdaq, Inc.

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