Dollar recovers a little ground against the euro

The dollar recovered some of its recent losses against the euro on Friday, but still fell heavily over the week, following the news of the Federal Reserve’s decision to buy $300bn of long-term government debt. Concern that the Fed’s plans could prove too costly and result in inflationary pressures prompted demand for the safe haven of the dollar on Friday, analysts said.

The euro’s strength was undermined by some grim data from the eurozone. A report from Eurostat showed a 3.5% monthly decline in the region’s industrial output in January. Concern over plans to prevent members of the eurozone from going bankrupt also undermined appetite for the euro.

This morning trade balance and construction output data is due from the eurozone at 10.00 GMT. In the US, existing home sales data will be announced at 14.00 GMT and the Treasury’s Geithner will be making a speech at 22.00 GMT.