EUR/USD hit 1.2990 on Friday, the pair’s highest since October 31; the pair subsequently consolidated at 1.2969 by close of trade on Friday, 1.71% higher for the week.
The pair is likely to find support at 1.2867, Friday’s low and resistance at 1.3019, the high from October 31.
Market sentiment improved after Greece’s Finance Minister said the International Monetary Fund had relaxed its debt-cutting target for the country, suggesting lenders were closer to a deal for a vital aid tranche to be paid.
However, other sources involved in the talks cautioned that the funding gap was far bigger than Greece has suggested.
German Finance Minister Wolfgang Schauble said he was confident a solution to Greece's financial problems would be found.
Talks between finance ministers and the International Monetary Fund ended without a deal on Tuesday, amid disagreements on how best to reduce the country’s debt to sustainable levels.
Investor confidence also strengthened after the German Institute for Economic Research earlier said that its index of business confidence improved to 101.4 in November from a reading of 100.0 the previous month, beating expectations for a decline to 99.5.
The data came a day after a report showed that Germany’s manufacturing purchasing managers’ index rose to 46.8 in November, up from 46.0 in October and better than forecasts for a reading of 45.9.
The euro zone’s manufacturing PMI rose to 46.2 this month from 45.4 in October, above expectations for a reading of 45.6, while French factory data also improved more-than-expected.
Elsewhere, investors continued to remain concerned over the U.S. fiscal cliff, automatic tax hikes and spending cuts due to come into effect on January 1.
There are fears the U.S. economy will fall back into a recession, unless a divided Congress and the White House can work out a compromise in the six weeks left before the January 1 deadline.
In the week ahead market participants will be focusing on developments relating to the U.S. fiscal cliff, as well as Monday’s meeting of the euro group of finance ministers to discuss unlocking Greece’s next aid installment.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, November 26
In Europe, Germany is to release the Gfk report on consumer climate, a leading indicator of consumer spending.
Tuesday, November 27
The U.S. is to release official data on durable goods orders, a leading indicator of production, as well as industry data on house price inflation, an important indicator of demand in the housing sector.
In addition, the Conference Board is to publish data on U.S. consumer confidence, while Federal Reserve Chairman Ben Bernanke is to deliver brief remarks at the National College Fed Challenge Finals, in Washington D.C.
Wednesday, November 28
In the euro zone, Germany is to release preliminary data on consumer price inflation, which accounts for a majority of overall inflation.
The U.S. is to release official data on new home sales, a leading indicator of economic health, as well as government data on crude oil inventories. Later Wednesday, the Fed is to publish its Beige Book.
Thursday, November 29
Official data is to be produced on German unemployment change. Separately, Italy is to hold a ten-year government bond auction.
Later in the day, the U.S. is to produce revised data on third quarter gross domestic product, as well as data on pending home sales and initial jobless claims.
Friday, November 30
The euro zone is to publish preliminary data on consumer price inflation, which accounts for the majority of overall inflation, as well as data on the unemployment rate in the bloc.
In addition, Germany is to produce government data on retail sales, a leading indicator of economic health, while France is to release a report on consumer spending.
Later Friday, the U.S. is to release government data on personal income, personal spending and core consumer inflation. The U.S. is also to publish official data on manufacturing activity in Chicago.