Forex - EUR/USD weekly outlook: April 23 - 27

Investing.com - The euro rose to a 12-day high against the U.S. dollar on Friday, as new signs of progress in tackling the sovereign debt crisis in the euro zone boosted market sentiment and sent the single currency broadly higher.

EUR/USD hit 1.3226 on Friday, the pair’s highest since April 4; the pair subsequently consolidated at 1.3217 by close of trade on Friday, jumping 1.15% over the week.

The pair was likely to find support at 1.3106, the low of April 4 and resistance at 1.3284, the high of March 21.

The euro found support on Friday after the Group of 20 leading economies agreed to boost the International Monetary Fund’s lending capacity by USD430 billion, to help shield the global economy from the debt crisis in the euro zone.

Elsewhere, the Ifo Institute for Economic Research said its index of German business climate ticked up to 109.9 in April, from 109.8 in the preceding month, against expectations for a decline to 109.5.

A separate report showed that producer price inflation in Germany rose more-than-expected in March, ticking up 0.6% after a 0.4% rise the previous month. Analysts had expected producer price inflation to rise 0.5% in March.

Market sentiment came under pressure earlier in the week, as Spain’s borrowing costs rose above 6% amid fears that the government will struggle to reduce one of the largest deficits in the euro zone, in the face of a looming recession.

In the U.S., data on Thursday showed that manufacturing activity in the Philadelphia-region expanded at a slower rate than expected in April and U.S. existing home sales declined unexpectedly last month.

The data came after a government report showing that the number of people who filed for unemployment assistance in the U.S. in the week ending April 14 fell less-than-expected, while the previous week’s figure was revised higher.

The Department of Labor said the number of individuals filing for initial jobless benefits in the week ending April 14 fell by 2,000 to a seasonally adjusted 386,000, disappointing expectations for a decline of 18,000 to 370,000.

The previous week’s figure was revised up to 388,000 from 380,000.

The soft data sparked concerns over the strength of the U.S. economic recovery, ahead of the Federal Reserve’s two-day policy meeting this week.

In the week ahead, investors will be eyeing the Fed’s rate statement for any signs that the central bank is leaning towards another round of monetary easing, while the euro looks set to remain under pressure as concerns over Spain’s fiscal woes continue.

In addition, the U.S. is both set to release preliminary data on first quarter gross domestic product.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, April 23

The euro zone is to produce preliminary reports on manufacturing and services purchasing managers’ indexes in France, Germany and throughout the single currency bloc.

Tuesday, April 24

In the euro zone, official data is to be produced on industrial new orders, a leading indicator of production, followed by a report on the business climate in Belgium.

Meanwhile, the U.S. is to produce a report on house price inflation, a key indicator of the housing industry’s health, as well as a Conference Board report on consumer confidence and government data on new home sales.

Wednesday, April 25

In the euro zone, European Central Bank President Mario Draghi is due to testify before the European Parliament's Economic and Monetary Committee, in Brussels.

The U.S. is to publish government data on durable goods orders, a leading indicator of production, and crude oil stockpiles. The Federal Reserve is to announce its benchmark interest rate and release its rate statement. Also Wednesday, U.S. Treasury Secretary Timothy Geithner is scheduled to speak.

Thursday, April 26

In the euro zone, Italy is to hold an auction of 10-year government bonds, while Germany is to release preliminary data on consumer price inflation.

Later Thursday, the U.S. is to publish government data on initial unemployment claims, an important signal of overall economic health, as well as industry data on pending home sales.

Friday, April 27

In the euro zone, Gfk data on the consumer climate in Germany is also to be produced as well as official data on French consumer spending.

The U.S. is to round up the week with preliminary data on first quarter GDP, as well as reports on the GDP price index and employment cost inflation. In addition, the University of Michigan is to release revised data on consumer sentiment.