Forex - EUR/USD weekly outlook: March 16 - 20

Investing.com - The euro dropped to 12-year lows against the dollar on Friday as mounting expectations for higher U.S. interest rates bolstered investor demand for the greenback.

EUR/USD hit lows of 1.0462, the weakest since January 9, 2003 before pulling back to 1.0496 in late trade, still down 1.31% for the day.

The single currency had already weakened broadly this year after the European Central Bank unveiled a trillion-euro quantitative easing program in January.

The euro turned sharply lower after the bank started asset purchases on Monday, pushing euro area bond yields to new lows.

Lower bond yields make the single currency less attractive to investors at a time when expectations are building that the Fed could start rising interest rates mid-year.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, advanced 1.22% to 100.32 late Friday, a level last reached in April 2003.

Sentiment on the euro was also hit by uncertainty over Greece’s future in the euro zone, after euro area finance ministers rejected proposed economic reforms put forward by Athens in exchange for more loans.

The euro was also lower against the pound, with EUR/GBP at 0.7116, holding above the seven-year low of 0.7013 set on Wednesday. The common currency fell to a 20-month low against the yen, with EUR/JPY hitting lows of 126.91 before easing back to 127.36 at the close.

In the week ahead, investors will be focusing their attention on Wednesday’s Federal Reserve policy statement to see if it would drop its reference to being patient before raising rates. Tuesday’s ZEW report on German economic sentiment will also be closely watched.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Friday, as there are no relevant events on this day.

Monday, March 16

In the euro zone, Germanys Bundesbank is to publish its monthly report.

The U.S. is to produce reports on industrial production and manufacturing activity in the New York region, as well as private sector data on the housing market.

Tuesday, March 17

In the euro zone, the ZEW Institute is to report on German economic sentiment. The euro area is also to release revised data on consumer inflation.

The U.S. is to report on building permits and housing starts.

Wednesday, March 18

The Fed is to announce its federal funds rate and publish its rate statement, which outlines economic projection and the factors affecting the monetary policy decision. Fed Chair Janet Yellen is to hold what will be a closely watched a post-policy meeting press conference.

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Thursday, March 19

The U.S. is to release reports on jobless claims, the current account and manufacturing activity in the Philadelphia region.