Investing.com - The dollar firmed against the euro on Thursday after a key Federal Reserve official said the U.S. economy is on the mend and left markets concluding that rate hikes could come in early 2015.
In U.S. trading, EUR/USD was down 0.27% at 1.3593, up from a session low of 1.3576 and off a high of 1.3641.
The pair was likely to find support at 1.3574, Monday''s low, and resistance at 1.3677, the high from June 6.
St. Louis Federal Reserve President James Bullard told Fox Business Network earlier that an improving economy may make conditions ripe for interest rates to rise possibly in early 2015.
The Commerce Department reported Wednesday that U.S. gross domestic product contracted at an annual rate of 2.9% in the first quarter of the year, far surpassing consensus forecasts for a decline of 1.7%, though markets quickly brushed off the dismal numbers as a weather-related disappointment.
"I think the market''s right to shake this off," Bullard told the network, describing the contraction as an "aberration."
"If you throw out the first quarter and just look forward over the next four quarters, most forecasters have 3%-plus growth."
Inflation, while still low, is on the rise and approaching the Fed''s 2% target.
"My forecast actually has us moving through 2% and over 2% in 2015," which bolstered the dollar despite lackluster U.S. data.
The U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending June 21 declined by 2,000 to 312,000 from the previous week’s revised total of 314,000.
Analysts had expected jobless claims to fall by 4,000 to 310,000 last week.
A separate report showed that U.S. personal spending rose 0.2% last month, below expectations for an increase of 0.4%. Personal spending for April was revised to a flat reading from a previously reported decline of 0.1%.
Elsewhere, the euro was down against the pound, with EUR/GBP down 0.40% at 0.7994, and down against the yen, with EUR/JPY down 0.55% at 138.07.
On Friday in the euro zone, Germany and Spain are to release preliminary data on consumer price inflation, while France is to publish data on consumer spending.
The U.S. is to round up the week with revised data on consumer sentiment.
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