Euro Strengthens As Eurozone Economic Confidence Improves

The euro climbed against its major rivals in the early European session on Friday, as Eurozone economic confidence strengthened unexpectedly in July, pointing to acceleration in economic recovery.

Survey data from the European Commission showed that the economic sentiment index rose slightly to 111.2 in July from 111.1 in June. The score was forecast to fall to 110.8.

The industrial confidence indicator held steady at 4.5, slightly above the forecast of 4.4 points. The flat change was caused by managers' virtually unchanged assessments of all components entering the confidence indicator.

The services confidence index rose to 14.1 in July from 13.3 in June. The increase in services confidence owed exclusively to markedly higher demand expectations and managers' views on past demand.

Investors focus on flash inflation data from Germany later in the day, which is expected to remain unchanged at 0.2 percent in July.

The euro showed mixed performance in the Asian session. While the euro rose against the greenback and the franc, it held steady against the pound. Against the yen, it dropped.

The euro that closed Thursday's trading at 1.1675 against the greenback advanced to 1.1717. Continuation of the euro's uptrend may see it challenging resistance around the 1.19 region.

The euro rose to 130.34 against the Japanese yen, after having fallen to a session's low of 129.55 at 9:00 pm ET. Next likely resistance for the euro-yen pair is seen around the 133.00 level.

Data from the Ministry of Internal Affairs and Communications showed that Japan's overall nationwide consumer prices rose 0.4 percent on year in June, in line with expectations and unchanged from the previous month.

Nationwide core CPI, which excludes food prices, also gained 0.4 percent on year - again unchanged and as expected.

Extending early rally, the 19-nation currency spiked up to a 2-1/2-year high of 1.1379 versus the franc. On the upside, the euro may locate resistance around the 1.16 mark.

The single currency strengthened to more than a 2-week high of 1.4700 versus the loonie, 2-day highs of 1.5686 against the kiwi and 1.4719 versus the aussie, from its previous lows of 1.4644, 1.5568 and 1.4647, respectively. If the euro extends rise, 1.48, 1.58 and 1.485 are possibly seen as its next resistance levels against the loonie, the kiwi and the aussie, respectively.

The common currency held steady against the pound, after advancing to 0.8954 at 3:05 am ET. The pair finished Thursday's trading at 0.8936.

Looking ahead, the German flash CPI data for July, Canada GDP data for May, U.S. GDP data for the second quarter, U.S. University of Michigan's final consumer sentiment index for July and U.S. Baker Hughes rig count data are slated for release in the New York session.

At 1:20 pm ET, Federal Reserve Bank of Minneapolis President Neel Kashkari is expected to speak at a town hall event, in Minnesota.