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Forex - EUR/USD weekly outlook: May 9-13

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Forex Pros - The week ending May 6 saw the euro pull back from a 17-month high against the U.S. dollar amid reports that Greece might leave the euro zone and after the European Central Bank indicated that rates may remain on hold next month.

EUR/USD hit 1.4939 on Wednesday, the pair's highest since December 4, 2009; the pair subsequently consolidated at 1.4318 by close of trade on Friday, tumbling 3.3% over the week.

The pair is likely to find support at 1.4156, the low of April 18 and resistance at 1.4587, last Friday's high.

The euro fell sharply on Friday after Germany's Spiegel Online reported that European Union finance ministers were meeting in Luxembourg to discuss Greece, including the issue of its possible exit from the euro zone.

Greece, through its Finance Ministry, subsequently denied it was considering leaving the single currency bloc.

The euro began its steep decline the previous day after ECB President Jean-Claude Trichet said the bank will monitor upside inflation risks "very closely," suggesting it may wait until after June to raise interest rates again.

Trichet refrained from using the phrase "strong vigilance," which would have signaled a June rate increase, indicating that policy makers may want more time to assess the strength of the recovery in the single currency bloc before following up on last months rate increase.

Meanwhile, the greenback was bolstered on Friday after official data showed that U.S. nonfarm payrolls rose by 244,000 in April, as the private sector posted the strongest employment gain in five years. Economists had forecast that payrolls would rise by 185,000.

However, the U.S. unemployment rate rose to 9.0% last month from 8.8% in March. It was the first increase in the jobless rate since November, when it hit 9.8%. Economists had forecast that that the jobless rate would remain unchanged at 8.8%.

In the week ahead, investors will be looking towards U.S. data on retail sales and inflation to gauge the strength of the U.S. economic recovery while the euro zone is to release preliminary data on gross domestic product on Friday.

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

Monday, May 9

The euro zone is to publish a report on investor confidence while Germany is to publish official data on its trade balance, the difference in value between imported and exported goods and services.

Tuesday, May 10

The U.S. is to release official data on import prices, an important inflationary indicator as well as data on economic optimism and wholesale inventories.

Wednesday, May 11

The U.S. is to publish official data on its trade balance, the difference in value between imported and exported goods and services. In addition, the country is to publish government data on crude oil inventories and the federal budget balance.

Thursday, May 12

The U.S. is to publish a weekly report on initial jobless claims as well as official data on producer price inflation, a leading indicator of consumer inflation. The country is also to publish government data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity.

Later in the day, Federal Reserve Chairman Ben Bernanke is to testify before the Senate Banking Committee in Washington.

The euro zone is to publish official data on industrial production, while France is to publish a report on consumer price inflation. Meanwhile, the ECB is to publish its monthly bulletin, which provides detailed analysis of current and future economic conditions from the bank's viewpoint.

Friday, May 13

The euro zone is to publish preliminary data on GDP, the broadest measure of economic activity and the primary gauge of the economy's health. Meanwhile, ECB President Jean-Claude Trichet is to speak at a conference in Madrid; his comments will be closely watched for any clues to the future possible direction of monetary policy.

The U.S. is to round up the week with official data on consumer price inflation while the University of Michigan is to publish preliminary data on consumer sentiment and inflation expectations.

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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.


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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