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Forex - EUR/USD rises on U.S. data, but gains capped

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Investing.com -

Investing.com - The euro rose against the U.S. dollar on Thursday, as disappointing U.S. jobless claims data weighed on the greenback, although the euro's gains were expected to remain limited after a report earlier showed that economic growth in the euro zone stagnated in the second quarter.

EUR/USD hit 1.3408 during U.S. morning trade, the session high; the pair subsequently consolidated at 1.3400, gaining 0.27%.

The pair was likely to find support at 1.3342, Wednesday's low and resistance at 1.3433, the high of August 8.

In a report, the U.S. Labor Department said the number of individuals filing for initial jobless benefits in the week ending August 9 increased by 21,000 to 311,000 from the previous week's revised total of 290,000.

Analysts had expected jobless claims to rise by 5,000 to 295,000 last week.

Earlier Thursday, preliminary data showed that euro zone gross domestic product failed to grow in the three months to June. Economists had expected a small expansion of 0.1%.

Germany's economy shrank by 0.2% in the three month to June, the first drop since 2012 and worse than forecasts for a contraction of 0.1%.

French GDP was flat in the second quarter, the second consecutive quarter of stagnation.

The weak data indicated that the economic recovery in the euro area is losing momentum, adding to pressure on the European Central Bank to do more to bolster growth after it cut rates to record lows in June.

A separate report showed that the annual rate of euro area inflation came in at 0.4% in July, in line with forecasts and unchanged from the preliminary estimate.

But consumer prices declined 0.7% from a month earlier compared to forecasts for a 0.6% drop, after a 0.1% gain in June.

The euro was also higher against the pound, with EUR/GBP rising 0.31% to 0.8032.

Sentiment on the pound remained vulnerable after the Bank of England cut its wage growth forecast for this year in half on Wednesday and said that the rate of pay growth would be a key factor in determining how quickly interest rates will rise.

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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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