Investing.com - The euro traded higher against the dollar on Friday despite solid U.S. retail sales and consumer sentiment reports, as investors locked in gains stemming for growing expectations for the Federal Reserve to tighten policy within a year and sold the greenback for profits.
In U.S. trading, EUR/USD was up 0.39% at 1.2972, up from a session low of 1.2910 and off a high of 1.2979.
The pair was likely to find support at 1.2858, Tuesday's low, and resistance at 1.3160, the high from Sept. 3.
The euro has taken hefty dives against the dollar in recent sessions on expectations for European and U.S. monetary policies to diverge.
While the European Central Bank recently cut interest rates and announced plans to purchase asset-backed securities to shore up the economy, the Federal Reserve is expected to close its bond-buying program next month and begin hiking interest rates in 2015, likely sooner than once anticipated.
The Fed will meet next week to review monetary policy, and markets are hoping for hints as to when benchmark interest rates will rise, though general uncertainty prompted investors to sell the greenback for profits.
By Friday, investors felt the greenback's gains over the single currency grown somewhat frothy, and sold the U.S. currency for profits despite upbeat U.S. data.
The Thomson Reuters/University of Michigan preliminary consumer sentiment index rose to a 14-month high of 84.6 this month from 82.5 in August. Analysts had expected the index to rise to 83.3 in September.
The report came after official data showed that U.S. retail sales rose 0.6% last month, in line with expectations. Retail sales for July were revised to a 0.3% gain from a previously estimated flat reading.
Core retail sales, which exclude automobiles, increased by 0.3% in August, also in line with market expectations and growing at the fastest pace since April. July's figure was revised to a 0.3% gain from a previously estimated 0.1% rise.
Elsewhere, the euro was up against the pound, with EUR/GBP up 0.13% at 0.7969, and up against the yen, with EUR/JPY up 0.38% at 138.94.