Euro Near Two Week High On Positive Data

The euro remained above $1.30 on Friday morning after climbing on Thursday to overtake the $1.30 mark for the first time in over two weeks. The common currency strengthened after a report from the eurozone showed that consumer and business sentiment improved.

The Wall Street Journal reported that the European Commission's Economic Sentiment Indicator climbed to 89.4 in May, the figure's first advance since February. The euro found a boost from the data as many saw the improvement as a signal that the eurozone economy was finding firmer ground.

Heading into June, many are wondering if the European Central Bank will lower its deposit rate below zero in an effort to inject funds into the sagging economy. A recent string of disappointing data would suggest that the bank needs to take extreme measures in order to kick start the economy; however Thursday's data may have provided a glimmer of hope that could prevent the bank from intervening further.

The euro also found support from profit taking by investors who had bet that the dollar would strengthen. After a string of positive data, many started looking to the US Federal Reserve for signs it was planning to ease up on its $85 billion per month asset buying plan. However, some analysts are saying bets on the dollar's strength and the Fed cutting back on quantitative easing so soon may be a bit presumptuous.

On Thursday, new US jobs data confirmed this prediction as the figure showed that weekly initial jobless claims rose unexpectedly as pending home sales figures increased, but at a slower rate than expected. Adding to pressure on the dollar, the US Commerce Department also released a report showing that the US economy's first quarter growth was at a slower pace than originally forecast.

BY Laura Brodbeck