The euro climbed against the dollar in European hours Friday on robust German economic data but ran into selling pressure ahead of $1.30 as traders were unwilling to push the common currency any higher ahead of a three-day weekend in both the U.K. and the U.S.
German consumer sentiment hit a fresh multi-year high in June and business confidence in the euro zone's largest economy picked up in May following two straight months of declines, suggesting that economic growth will accelerate in the second half of the year.
The euro climbed to as high as $1.2991 against the dollar, supported by a small rise in European stocks in the wake of the German data.
But the common currency was unable to sustain its gains and retreated back towards $1.2950, with equities also paring their earlier gains.
"People are long the dollar and are comfortable being so this summer. But maybe we are seeing some taking of profits heading into the long weekend," said Chris Turner, currency strategist at ING in London. "It doesn't feel like there are people out there [buying the euro]."
With a public holiday in the world's two biggest foreign-exchange hubs London and New York Monday, it is expected to be a quiet afternoon with thinner volumes than usual. The only data of note are U.S. April durable goods orders at 1230 GMT.
Likely weaker data could prompt further liquidation of positive dollar bets, said BNP Paribas SA currency strategists in a note to clients. But they too don't expect Friday's softer tone to the dollar to last.
"Beyond the next few days [and] weeks, the dollar should trade higher as expectations for Fed tapering and U.S. data outperformance relative to other G-10 economies provides support," they said.
Elsewhere, the Swedish krona came under pressure after consumer and manufacturing confidence dipped in May as concerns about the state of the export-dependent economy deepened. The euro rose to above SEK8.63 against the krona from SEK8.60 before the data.
In emerging markets, the Polish zloty lost ground against the euro after much weaker-than-expected April retail sales numbers. Strategists said the poor data raised the chances of further monetary policy easing in Poland. The euro rose to PLN4.2099 against the zloty from PLN4.1960 at the start of European trading.
At 1035 GMT, the euro was trading at $1.2983 against the dollar, compared with $1.2933 late Thursday in New York, according to trading system EBS. The dollar was at Y101.55 against the yen, compared with Y102.01, while the euro was at Y131.77, compared with Y131.99. Meanwhile, the pound was trading at $1.5135 against the dollar, compared with $1.5109 late Thursday in New York.
The Wall Street Journal Dollar Index, which tracks the dollar against a basket of currencies, was trading at 75.183, compared with 75.357 late Thursday in New York.
A summary of key levels for chart-watching technical strategists is below:
Forex spot: EUR/USD USD/JPY GBP/USD USD/CHF
Spot 1034 GMT 1.2985 101.58 1.5132 0.9613
3 Day Trend Range Bearish Bearish Bearish
Weekly Trend Bearish Bullish Bearish Bullish
200 day ma 1.3029 90.51 1.5583 0.9378
3rd Resistance 1.3064 102.59 1.5200 0.9772
2nd Resistance 1.3030 102.31 1.5175 0.9717
1st Resistance 1.2998 102.13 1.5140 0.9693
Pivot* 1.2904 102.14 1.5084 0.9713
1st Support 1.2895 101.08 1.5015 0.9565
2nd Support 1.2865 100.83 1.4975 0.9521
3rd Support 1.2821 100.00 1.4939 0.9500
Forex spot: EUR/GBP
Spot 1034 GMT 0.8578
3 Day Trend Bullish
Weekly Trend Bullish
200 day ma 0.8635
3rd Resistance 0.8658
2nd Resistance 0.8636
1st Resistance 0.8600
Pivot* 0.8555
1st Support 0.8533
2nd Support 0.8500
3rd Support 0.8470
