Forex Pros - The euro rallied to a five-day high against the U.S. dollar on Friday, after a string of disappointing U.S. economic data fuelled concerns that U.S. growth is stagnating.
EUR/USD hit 1.3968 on Monday, the pair's lowest since March 17; the pair subsequently consolidated at 1.4315 by close of trade on Friday, jumping 1.32% over the week.
The pair is likely to find support at 1.4001, the low of May 24 and short-term resistance at 1.4422, the high of May 11.
The euro began the week at a two-month low against the dollar, amid fears that Greece would restructure its debt. However, on Friday, Greek central bank chief George Provopoulos said the country will repay its debts in full without restructuring if it sticks to a fiscal austerity plan.
The single currency also found support after European Central Bank President Jean-Claude Trichet said Thursday that policy makers were monitoring inflation "carefully", fuelling expectations that the bank will hike interest rates again this year.
The dollar weakened broadly on Friday, after the National Association of Realtors' said pending home sales index fell 11.6% in April, much worse that the 1.0% decline forecast. A separate report showed that U.S. customer spending rose just 0.4% last month, less than the expected 0.5% gain.
Meanwhile, a day earlier revised data showed that U.S. gross domestic product grew more slowly than forecast in the first quarter, rising at 1.8% annual rate, disappointing expectations for a 2.1% increase.
In the week ahead, U.S. markets will be closed on Monday for a public holiday, while investors will be looking towards Friday's data on U.S. non-farm payrolls to gauge the strength of the economic recovery. A speech on Thursday by ECB President Jean-Claude Trichet will also be closely watched.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, May 30
Markets in the U.S. are to remain closed for Memorial Day.
Tuesday, May 31
The euro zone is to publish preliminary data on consumer price inflation, which accounts for the majority of overall inflation, as well as a report on the unemployment rate in the single currency bloc. Separately, Germany is to publish official data on unemployment change.
Also Tuesday, the U.S. is to publish industry data on house price inflation and consumer confidence, as well as an index of manufacturing activity in the Chicago area.
Wednesday, June 1
U.S. payroll processing firm ADP is to publish its report on non-farm payrolls, which heads up government data by two days. Meanwhile, the Institute of Supply Management is to publish data on manufacturing activity.
Thursday, June 2
In the euro zone, markets in France, Germany and Italy will remain closed for Ascension Day. Meanwhile, ECB head Jean-Claude Trichet is to speak; his comments will be closely watched for any clues to the future possible direction of monetary policy.
The U.S. is to publish its weekly report on initial jobless claims, as well as revised data on non-farm productivity and labor costs. The country is also to publish official data on factory orders, a leading indicator of production, and a government report on crude oil stockpiles.
Friday, June 3
The U.S. is to round up the week with a flurry of data, including a government report on non-farm employment change, a big market mover. The U.S. is also to release official data on the overall unemployment rate and average hourly earnings, while the Institute of Supply Management is to publish its index of service sector growth.