Euro hits its highest level in 3 weeks

The euro climbed to a three-week peak against the dollar on Friday as concerns about a slowdown in the Eurozone ebbed, but the single currency could reverse gains this week as bond auctions in Spain and Italy draw scrutiny. Any sign of eroding confidence in the bonds of these peripheral countries could undermine the euro. Economic data from Germany and a meeting of European finance ministers will also be key events for the week. "We think euro/dollar is headed lower," said Aroop Chatterjee, currency strategist at Barclays Capital in New York. "European economic data continues to be lacklustre. We saw a snapback in data earlier this year, but it's been primarily sentiment-driven. "The euro appears to be stuck in a trading range and our house view is that it would go gradually lower to $1.20 in 12 months," he added. The dollar is seen remaining supported by an improving economic landscape in the United States that contrasts starkly with European countries that are teetering on the brink of recession or are already in one. Data on sales of new US homes on Friday, for instance backed the view the country's housing sector is on a stable path to recovery, something that is seen as key to the health of the overall economy. Worries ease But on Friday overall, worries about faltering global growth in the Eurozone and China eased a day after hitting stocks and riskier currencies, tempering demand for safer bets such as the dollar and the yen. The euro last traded at $1.32700, up 0.6 per cent, after hitting a three-week high of $1.32940 earlier in the global session. It was also up from Thursday's low of $1.31334 and posted its best weekly performance since late February. A key level of resistance for the euro is $1.33, and a break of that level would likely move it up toward $1.3500. The Australian dollar, meanwhile, was up 0.9 per cent at $1.0479 after hitting a two-month low of $1.0336 the previous session, while the New Zealand dollar advanced 1.1 per cent to $0.8188. "Today says: ‘Don't worry, be happy'," said Jonathan Lewis, chief investment officer at Samson Capital Advisors, which has assets under management of around $7 billion. "That's what it means when the best performing currencies on the day are commodity and growth-oriented ones like the New Zealand and Australian dollars, and the Norwegian krone and the Japanese yen is near the back of the bus." Against the yen, the greenback was down 0.1 per cent at 82.441 yen, while the euro rose 0.4 per cent to 109.400 yen. The greenback has gained more than 7 per cent against the yen since the start of this year. The euro has jumped 9.8 per cent versus the Japanese currency, with gains accelerating after the Bank of Japan, in a surprise move in February, initiated more quantitative easing.