Forex - EUR/USD weekly outlook: February 18 - 22

The euro was almost unchanged against the dollar on Friday as the single currency remained under pressure following worse-than-expected data on euro zone fourth quarter growth on Thursday.

EUR/USD hit a session low of 1.3307 before settling at 1.3362 by close of trade, dipping 0.01% on the day and 0.30% lower for the week.

The pair is likely to find support at 1.3263, the low of January 23 and resistance at 1.5434, Thursday’s high.

Data on Thursday showed that euro zone gross domestic product contracted by 0.6% in the three months to December, compared to expectations for a 0.4% decline.

It was the fastest rate of decline since 2009 and marked a third consecutive quarter of contraction.

Germany’s economy, the euro zone’s largest, contracted by 0.6% in the in the fourth quarter, more than expectations for a 0.5% drop on declining exports and investment.

Meanwhile, data on Friday showed that the euro zone posted a larger-than-expected trade surplus in December as imports fell faster than exports.

Eurostat said the unadjusted trade surplus was EUR11.7 billion in December, higher than the EUR8 billion a year earlier, but lower than forecasts for a rise to EUR13.1 billion.

The report said euro zone exports were down 1.8% in December month-on-month, while imports dropped 3.0%.

In the U.S. data on Friday indicated that the economic recovery remains uneven.

The New York Federal Reserve reported manufacturing in New York state expanded in February, while a survey showed a surprisingly strong rise in U.S. consumer sentiment.

The Empire State manufacturing index rebounded to 10.0 in February, from minus 7.8 in January, outstripping expectations for a reading of minus 2.

The University of Michigan said its index of consumer confidence rose to 76.3 from 73.8 in January, better than expectations for a reading of 74.8.

However, a separate report showed that industrial production in the U.S. slipped 0.1% in December after a revised 0.4% gain in December. Economists had been expecting an uptick of 0.2%.

In the week ahead investors will be awaiting Wednesday’s minutes of the Federal Reserve’s January meeting, while euro zone manufacturing activity and Germany’s Ifo business climate index will 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.

Monday, February 18

The euro zone is to release official data on the current account.

Markets in the U.S. are to remain closed for the President’s Day holiday.

Tuesday, February 19

In the euro zone, the ZEW Institute is to release its closely watched index of German economic sentiment, a leading indicator of economic health.

Wednesday, February 20

In the euro zone, Germany is to produce official data on producer price inflation, while both Germany and France are to hold auctions of 10-year governments bonds.

The U.S. is to release official data on building permits, a strong indicator of future construction activity, as well as data on housing starts. The U.S. is also to publish official data on producer prices, while the Federal Reserve is to release the minutes of its most recent policy meeting.

Thursday, February 21

The euro zone is to release closely watched preliminary data on manufacturing and service sector activity, while Germany and France are also to publish individual reports. In addition, Spain’s Treasury is to auction 10-year government bonds.

The U.S. is to release official data on consumer price inflation as well as the weekly government report on initial jobless claims. The U.S. is also to publish industry data on existing home sales, a report on manufacturing activity in Philadelphia and official data on crude oil stockpiles.

Friday, February 22

In the euro zone, the Ifo Institute is to publish a report on German business climate, a leading indicator of economic health.