Investing.com - The euro fell to a fresh 14-month trough against the broadly stronger dollar on Friday as expectations that the Federal Reserve is moving closer to raising U.S. interest rates continued to bolster demand for the greenback.
EUR/USD was down 0.71% to 1.2830 in late trade, the lowest level since July 2013.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, ended Friday’s session up 0.63% to 84.93, the highest level since July 2013, capping its tenth consecutive week of gains.
The dollar has rallied in the past two months, boosted by expectations for an early hike in U.S. interest rates, while the European Central Bank looks likely to stick to a looser monetary policy stance.
On Wednesday the Fed offered fresh guidance on its plans tighten monetary policy, outlining in more detail how it will start to raise short term interest rates when the time comes.
The Fed statement reiterated that it expects rates to remain on hold for a "considerable time", after its bond purchasing program ends, while Chair Janet Yellen stressed that the timing of any change in interest rates is dependent on the strength of the economic recovery.
The Fed also cut its monthly asset purchase program by another $10 billion, keeping the program on track to finish next month.
The euro has remained under pressure against the dollar since the ECB unexpectedly cut rates to record lows across the euro zone earlier this month, and implemented fresh measures in an attempt to shore up inflation in the currency bloc.
On Thursday, euro area lenders borrowed less than expected from the ECB under its new low cost loan program.
The ECB said it allotted €82.6 billion to 255 bidders in its new Targeted Long Term Refinancing Operation, or TLTRO. That was well below the €100 to €150 billion predicted by analysts.
The low loan uptake indicated that the operation will have only a limited impact on boosting liquidity in the euro area.
The euro also ended lower against the yen on Friday, with EUR/JPY down 0.37% to 139.95, off the four month highs of 141.20 struck earlier in the session.
In the week ahead, investors will be awaiting Tuesday’s data on euro zone private sector activity, amid concerns that the recovery in the region is losing momentum.
The week will also bring a fresh look at the U.S. housing sector, with reports on both new and existing home sales, as well as Thursday’s data on durable goods orders and initial jobless claims.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, September 22
ECB President Mario Draghi is to appear before the European Parliament's Economic and Monetary Committee, in Brussels.
The U.S. is to release private sector data on existing home sales.
Tuesday, September 23
The euro zone is to publish preliminary data on private sector activity, while Germany and France are to also to publish data on private sector growth.
Wednesday, September 24
The Ifo Institute is to release its report on German business climate.
The U.S. is to publish data on new home sales.
Thursday, September 25
The ECB is to publish data on M3 money supply and private loans.
The U.S. is to release reports on durable goods orders and initial jobless claims.
Friday, September 26
The Gfk think tank is to release a report on German consumer climate.
The U.S. is to round up the week with revised data on gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health. The U.S. is also to release revised data on consumer sentiment.