EUR/USD weekly outlook: June 2 - 6

The euro was higher against the dollar on Friday, as soft economic data weighed on the greenback, but the shared currency’s gains were held in check amid heightened expectations for monetary easing by the European Central Bank.

EUR/USD rose to 1.3633 late Friday from a three month trough of 1.3585 on Thursday, trimming the week’s losses to 0.13%. For the month, the euro dropped 1.69% against the dollar.

The pair is likely to find support at 1.3585, Thursday’s low and resistance at 1.3675.

Data on Friday showing that the annual rate of inflation in Italy and Spain slowed in May underlined expectations that the ECB will take steps to tackle low consumer price growth, which is threatening the fragile recovery in the euro zone.

The annual rate of inflation in Spain slowed to 0.2% in May from 0.3% in April, official data showed, while the annual rate of inflation in Italy slowed to 0.4% last month from 0.5%.

The dollar eased on Friday after data showed that U.S. consumer spending fell 0.1% in April from a month earlier, missing forecasts for a 0.2% increase. Personal income rose 0.3%, in line with forecasts.

Separately, the final reading of the University of Michigan's consumer-sentiment index for May came in at 81.9, up slightly from a preliminary reading of 81.8, but falling short of forecasts for 82.5.

The U.S. dollar index, which tracks the dollar against six other major currencies, traded softer on Friday and was last down 0.11% at 80.44. Earlier in the week, the index rose to highs of 80.63, the most since early April.

The euro also pushed higher against the yen on Friday, with EUR/JPY rising 0.22% to 138.76, up from Thursday’s four month lows of 137.95, but lost 0.27% for the week. The euro tumbled 2.10% against the yen in May.

In the week ahead, investors will be looking to Friday’s U.S. nonfarm payrolls report for May for further indications on the strength of the labor market, while Tuesday’s euro zone inflation report will also be in focus, ahead of the ECB policy meeting and press conference on Thursday.

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

Monday, June 2
  • In the euro zone, Germany is to release preliminary data on consumer price inflation, while Spain and Italy are to produce data on manufacturing activity.
  • Later Monday, the Institute of Supply Management is to publish a report on U.S. manufacturing activity.

Tuesday, June 3
  • The euro zone is to release preliminary data on consumer inflation as well as a report on the unemployment rate. Spain is also to publish data on the change in the number of people employed.
  • The U.S. is to produce data on factory orders.

Wednesday, June 4
  • In the euro zone, Spain and Italy are to release data on service sector activity.
  • The U.S. is to release the ADP report on private sector job creation, which leads the government’s nonfarm payrolls report by two days. The U.S. is also to release data on the trade balance.
  • The ISM is to publish a report on U.S. service sector activity.

Thursday, June 5
  • The euro zone is to release data on retail sales, while Germany is to produce data on factory orders.
  • Later in the day, the ECB is to announce its benchmark interest rate. The announcement is to be followed by a press conference with President Mario Draghi.
  • The U.S. is to publish the weekly report on initial jobless claims.

Friday, June 6
  • In the euro zone, Germany is to release data on the trade balance.
  • The U.S. is to round up the week with the closely watched government data on nonfarm payrolls and the unemployment rate

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