The broadly weaker euro fell to its lowest level in five months against the safe haven dollar and Japanese yen on Friday before recovering some of these losses late in the session.
EUR/USD touched lows of 1.3491, the weakest since February 6 before pulling back to 1.3525 late Friday. For the week, the pair was down 0.56%.
The drop in the euro came amid increased demand for safe haven assets following the shooting down of a Malaysia Airlines jet in eastern Ukraine on Thursday.
Moscow has denied involvement in the crash, which came a day after the U.S. announced a fresh round of sanctions against Russia for supporting separatists in east Ukraine.
Markets were also unsettled as Israel expanded its ground offensive in Gaza.
The euro came under additional pressure after the Bank of Italy cut its growth forecast for this year to 0.2% from 0.7% on Friday and warned that risks to the economy remained to the downside. The announcement underlined concerns over the faltering economic recovery in the currency bloc.
Earlier in the week European Central Bank President Mario Draghi said that large scale asset purchases are “squarely” within the bank’s mandate. The remarks were the latest indication that the central bank is open to further monetary easing measures to stave off the risk of deflation in the euro area.
Demand for the dollar continued to be underpinned after Federal Reserve Chair Janet Yellen indicated earlier in the week that interest rates may rise sooner if the economy continues to improve.
Elsewhere, EUR/JPY hit lows of 136.72, the lowest since February 5 and was last at 137.07. The pair lost 0.59% for the week.
In the week ahead, the U.S. is to release what will be closely watched data on consumer prices, home sales and manufacturing orders. Investors will also be awaiting surveys on private sector activity in the euro zone.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Wednesday as there are no relevant events on this day.
Monday, July 21
In the euro zone, Germany’s Bundesbank is to publish its monthly report.
Tuesday, July 22
The U.S. is to release reports on consumer price inflation and existing home sales.
Thursday, July 24
The euro zone is to publish preliminary data on manufacturing and service sector activity, while Germany and France are to publish individual reports on private sector growth.
Meanwhile, Spain is to release its latest employment report.
The U.S. is to produce data on unemployment claims, manufacturing activity and new home sales.
Friday, July 25
In the euro zone, Germany is to publish the Gfk report on consumer climate and the Ifo report on business climate.
The U.S. is to round up the week with data on durable goods orders.