* Euro gets mild support from French, German growth data
* Euro zone flash GDP at 0900 GMT seen marking end of
* Dollar firm after retail sales data lifts Treasury yields
* U.S. data could boost case for September tapering
By Anooja Debnath
LONDON, Aug 14 The euro rose against the dollar
on Wednesday after better-than-expected French and German growth
data indicated the euro zone had probably climbed out of a long
However, further gains for the euro were likely to be
tempered as the U.S. currency held broadly firm after
forecast-beating data on Tuesday increased the prospects of the
Federal Reserve scaling back its stimulus as early as next
The immediate focus for the single currency was a flash
estimate euro zone second quarter gross domestic product due at
0900 GMT, which is expected to show the currency bloc is
recovering after six quarters of contraction.
Economists polled by Reuters forecast quarter-on-quarter
growth of 0.2 percent.
The euro was up 0.1 percent at $1.3272 but off
Tuesday's high of $1.33175. Traders cited stop-loss sell orders
below $1.3230 and a break there could see it slip to $1.3155/85.
"A good euro zone GDP reading will help the euro but it
won't push it much higher. It will likely just avoid it from
slipping below $1.32," said Niels Christensen, FX strategist at
He expected the euro to struggle over the next few months
and end the year at $1.25, as improving U.S. data was likely to
see the Fed trimming its massive stimulus, moving interest rate
differentials in favour of the dollar.
The dollar index hit a near one-week high against a basket
of currencies, helped by upbeat U.S. retail sales data on
Tuesday that sent Treasury yields sharply higher.
Ten-year Treasury yields last stood at 2.71
percent, just 4 basis points shy of a two-year high.
The data fuelled more talk of an imminent reduction of the
Fed's $85-billion-a-month bond-buying programme, but further
dollar gains are seen hinging on upcoming figures on U.S.
industrial output, inflation and housing later in the week.
The dollar index stood firm at 81.80, having climbed
more than 1.0 percent from the August 8 trough of 80.868.
"We think the Fed will start reducing quantitative easing in
September unless we see surprisingly weak data, particularly on
payrolls," said Shinichiro Kadota, FX strategist at Barclays.
Atlanta Fed President Dennis Lockhart said on Tuesday he
could not rule out the Fed reducing stimulus from next month.
Traders said the market would be extra sensitive to a series
of U.S. data due later in the week. Wednesday will see producer
price data while Thursday's industrial production and consumer
inflation reports are likely to draw more attention.
The dollar rose as high as 98.43 yen, though traders
said a move above 98.50 yen looked difficult in the near term.