Forex - EUR/USD erases losses after downbeat U.S. data

The euro erased losses against the U.S. dollar on Friday, as the release of downbeat U.S. new home sales data weighed on demand for the greenback. 

EUR/USD pulled away from 1.3334, the session low, to hit 1.3368 during U.S. morning trade, adding 0.09%. 

The pair was likely to find support at 1.3298, Thursday's low and resistance at 1.3427, the high of August 21. 

Official data showed that U.S. new home sales dropped 13.4%, or by 394,000 units, in July, confounding expectations for a 1.4% decline. In June, new home sales rose 3.6% by 455,000 units. 

The data came a day after the Department of Labor said the number of people who filed for unemployment assistance in the U.S. last week rose by 13,000 to a seasonally adjusted 336,000, slightly higher than forecasts for 330,000. 

The greenback had strengthened broadly on Wednesday, after the minutes of the Federal Reserve's July meeting showed that officials were "broadly comfortable" with plans to start unwinding the bank’s USD85 billion-a-month bond buying program.

However, officials remain divided over the timing of possible reduction, with almost all committee members agreeing that a change in the asset purchase program was not yet appropriate. 

The minutes described recent U.S. economic data as “mixed”, indicating that plans to taper could be pushed back if the economy was to weaken.

The euro was also higher against the pound with EUR/GBP rising 0.29%, to hit 0.8593. 

Also Friday, official data showed that the U.K. gross domestic product grew by 0.7% in the second quarter, higher than expectations for a 0.6% expansion. 

Separately, the U.K. Office for National Statistics said, in a preliminary report, that business invest rose 0.9% in the last quarter, beating expectations for a 0.6% increase, after a 1.9% decline in the three months to March. 

Data also showed that mortgage approvals in the U.K. rose less-than-expected in July, rising by GBP37,200 after a GBP37,300 increase the previous month. Analysts had expected mortgage approvals to rise by GBP38,800 last month.