Investing.com - The euro softened against a firming dollar on Thursday after data revealed U.S. retail sales came in stronger than expected in November, fueling hopes for a busy holiday shopping season.
In U.S. trading, EUR/USD was down 0.49% at 1.2387, up from a session low of 1.2362 and off a high of 1.2495.
The pair was likely to find support at 1.2245, Monday's low, and resistance at 1.2507, the high from Dec. 1.
The U.S. Commerce Department reported earlier that retail sales rose 0.7% last month, beating expectations for a gain of 0.4%.
October's retail sales growth figure was revised up to 0.5% from 0.3%.
Rising retail sales over time correlate with stronger economic growth, while weaker sales signal a declining economy.
Core retail sales, which exclude volatile transportation items, advanced 0.5% in November, easily surpassing forecasts for a 0.1% increase. Core sales in October rose by 0.4%.
Core retail sales correspond closely with the consumer spending component of the government's gross domestic product report. Consumer spending accounts for as much as 70% of U.S. economic growth.
Thursday's retail sales numbers boosted expectations for the Federal Reserve to hike interest rates earlier in 2015 than once anticipated, which gave the dollar support.
Elsewhere, the U.S. Department of Labor reported that the number of individuals filing for initial jobless benefits in the week ending Dec. 6 fell by 3,000 to 294,000, beating market calls for the figure to increase to 299,000, which also supported the dollar by boosting optimism over the health of the U.S. labor market.
The number of Americans applying for new jobless benefits has held below the 300,000-level for 12 out of the past 13 weeks.
Continuing jobless claims in the week ended Nov. 29 rose to 2.514 million from 2.372 million in the preceding week. Analysts had expected continuing claims to fall to 2.360 million.
The four-week moving average was 299,250, an increase of 250 from the previous week’s total of 299,000. The monthly average is seen as a more accurate gauge of labor trends because it reduces volatility in the week-to-week data.
The euro, meanwhile, continued to come under pressure following a surprise decision by the Greek government to bring forward a parliamentary vote for president to next week from February.
Markets were spooked by the risk of snap elections, which could take place if Prime Minister Antonis Samaras’s candidate is not approved by parliament, which could see the anti-bailout Syriza party take power.
Elsewhere, the euro was down against the pound, with EUR/GBP down 0.42% at 0.7887, and up against the yen, with EUR/JPY up 0.85% at 147.93.
On Friday, the euro zone is to publish a report on industrial production.
The U.S. is to round up the week with data on producer prices and a preliminary report on consumer sentiment.