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Forex - EUR/USD trims gains after upbeat UoM report

Published 09/12/2014, 10:00 AM
Updated 09/12/2014, 10:00 AM
Euro pares gains vs. broadly stronger dollar

Euro pares gains vs. broadly stronger dollar

Investing.com - The euro trimmed gains against the U.S. dollar on Friday, to hold steady within close distance of a 14-month trough as the release of upbeat U.S. consumer sentiment and retail sales data lent support to the greenback.

EUR/USD hit 1.2955 during U.S. morning trade, the session high; the pair subsequently consolidated at 1.2925, up 0.02%.

The pair was likely to find support at 1.2858, the low of September 9 and a 14-month low and resistance at 1.2986, the high of September 5.

In a preliminary report, the University of Michigan said its consumer sentiment index rose to a 14-month high of 84.6 this month, from a reading of 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 excludes automobiles, increased by 0.3% in August, 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.

The positive data added to expectations for an early hike in U.S. interest rates after a study by the San Francisco Federal Reserve published on Monday indicated that central bank officials see rates rising sooner than markets expect.

The Fed was expected to cut its asset purchase program by another $10 billion at its upcoming policy meeting next week which would keep it on track for winding up the program in October, and to start raising interest rates sometime in mid-2015.

Earlier Friday, official data showed that euro zone industrial production rose 1.0% in July, exceeding expectations for a 0.5% gain, after a 0.3% fall in June.

But sentiment on the single currency remained vulnerable after the European Central Bank unexpectedly cut rates to record lows across the euro zone last week and unveiled new easing measures in a bid to shore up the faltering recovery and boost inflation.

The euro was also higher against the pound, with EUR/GBP adding 0.11% to 0.7968.

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