The euro was steady close to eight-month highs against the dollar on Friday after St. Louis Federal Reserve President James Bullard indicated that the U.S. central bank could start to taper its stimulus program in October.
EUR/USD settled at 1.3523 on Friday, dipping 0.05% for the day after rising as high as 1.3567 on Thursday, the highest since February 7. On the week, the pair was 1.4% higher.
The pair is likely to find support at 1.3475 and resistance at 1.3567, Thursday’s high.
The greenback found support after St. Louis Fed President James Bullard said the decision not to taper in September was “close” and did not rule out a small reduction in the central bank's bond purchases in October.
The comments came during an interview with Bloomberg television.
The euro rallied to its highest level since February against the dollar after the Federal Reserve said Wednesday that it wanted to see more evidence of a sustained economic recovery before it adjusted the scale of its bond buying program.
The announcement surprised markets, which had been expecting the Fed to cut its USD85 billion-a-month stimulus program by USD10 billion to USD15 billion.
In a press conference following the Fed statement, Chairman Ben Bernanke reiterated that the plan to taper asset purchases was never a "preset course," and added that the bank's decision was dependent on how the economic recovery continues to progress.
The central bank also revised down its outlook for growth this year to a range of 2% to 2.3%, from its June forecast for 2.3% to 2.6% growth.
In the week ahead, uncertainty over the direction of Federal Reserve policy and the decision over Chairman Ben Bernanke’s eventual successor look likely to weigh on the dollar.
Investors will be closely watching U.S. data on consumer confidence and durable goods orders in an attempt to gauge the strength of the economic recovery. Investors will also be closely watching the outcome of Sunday’s general elections in Germany.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, September 23
The euro zone is to release preliminary data on manufacturing and service sector activity. Germany and France are to produce individual reports.
European Central Bank President Mario Draghi is to testify about the economy before the Committee on Economic and Monetary Affairs, in Brussels.
Tuesday, September 24
The Ifo Institute is to release a closely watched report on German business climate, a leading economic indicator.
The U.S. is to release private sector data on house price inflation, as well as a closely watched report on consumer confidence.
Wednesday, September 25
The euro zone is to release the results of the Gfk index of consumer climate, an important economic indicator.
The U.S. is to release data on durable goods orders, a leading indicator of production, in addition to a report on new home sales.
Thursday, September 26
The U.S. is to release the weekly report on initial jobless claims, as well as final data on second quarter growth and private sector data on pending home sales.
Friday, September 27
In the euro zone, Germany is to produce preliminary data on consumer inflation, while France is to release a report on consumer spending. ECB President Mario Draghi is to speak at an event in Milan.
The U.S. is to round up the week with revised data on consumer sentiment and inflation expectations from the University of Michigan, as well as data on personal income and expenditure.
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