* German, French GDP beat forecasts ahead of euro zone number
* Dollar weak after U.S. retail sales data
* Australian dollar lifted by China CPI
By Laurence Fletcher
LONDON, Feb 14 (Reuters) - Better-than-forecast German and French economic growth numbers on Friday helped the euro advanced to its highest level in almost three weeks against a dollar weakened by soft U.S. data.
It rose 0.2 percent to $1.3712, as economic growth in Germany - the euro zone’s largest economy - unexpectedly accelerated to 0.4 percent in the fourth quarter, while growth in France also beat forecasts and third quarter numbers were revised upwards.
Investors will also look to euro zone GDP numbers, due at 1000 GMT, for further support for the euro’s rally this month against the greenback.
“German GDP didn’t bring any surprises but French did,” said Dag Muller, technical analyst at SEB in Stockholm. “That helps.”
He pointed to order flows that pushed the euro higher against the dollar ahead of Thursday’s poor U.S. retail sales data, and highlighted key levels at $1.3740 and $1.3562.
“It ($1.3740) is a point where those who want to trade euro-dollar on the short side will give up,” he said. “But if it breaks Wednesday’s low of $1.3562 then euro-dollar bears will start to smile again.”
The euro was flirting with the $1.37 level, the top of the daily Ichimoku cloud, a technical measure that is significant for chartists as a close above that level could be seen as sending the euro higher.
It was also helped as the spread of U.S. 2-year Treasuries over 2-year German bunds fell.
Yields were weighed down by U.S. retail sales, which fell unexpectedly in January, while more Americans filed for jobless benefits last week, the latest signs the world’s biggest economy started the year on a softer footing as bad weather took its toll.
The dollar index slid to a low of 80.102, reaching a level last seen on Jan. 2, and was last at 80.158, down 0.2 percent. It was down 0.3 percent against the yen at 101.83 yen .
The falls come despite new Federal Reserve chairman Janet Yellen’s testimony this week that the central bank was on track to keep reducing its stimulus even though the labour market recovery was far from complete.
“The recent string of worse-than-expected indicators from the U.S. are calling into question the recovery scenario there,” Marshall Gittler, head of global FX strategy at IronFX Global, said.
The Australian dollar was in focus after it dropped one full U.S. cent on Thursday in the wake of surprisingly weak labour data.
However, it continued to rebound on Friday, rising 0.5 percent to $0.9018, helped by data from China that showed consumer prices rose 2.5 percent in January, broadly in line with expectations.
China is Australia’s main export market and the Aussie dollar is often used as a liquid proxy for China plays.