The euro recovered from one-week lows against the US dollar on Friday as investors took profits on bets against the currency, after it was burdened this week by concerns about Italy's spending proposals and Britain's plans to exit the European Union. The single currency had dropped after the European Commission on Thursday sent Rome a letter calling a draft budget an "unprecedented" breach of EU fiscal rules, the first step of a procedure that could end with Brussels rejecting the budget and fining Italy.
The failure to reach a deal for Britain to exit the EU has also weighed on the euro and the British pound. EU negotiator Michel Barnier said a Brexit deal was 90 percent done, but also warned that failure to resolve the Irish border question could derail any agreement.
It has been "quite a negative week for the euro, and I would say (it's) drifting lower primarily because we're no closer on Brexit than when we were at the start of the week," said Greg Anderson, global head of foreign exchange strategy for BMO Capital Markets in New York. Closing out profitable trades, however, provided some support for the euro on Friday.
"The market has added to shorts considerably during the week and so I'm not surprised that the down move ended today," said Anderson, noting that traders are "taking profit on a short that's worked for them." The single currency fell to $1.1433, the lowest since October 9, before climbing back to $1.1486. It is down from $1.1621 on Tuesday.
The dollar also weakened as US stocks opened higher on upbeat results from major US companies such as P&G and Honeywell. Canada's dollar weakened after Canadian inflation and retail sales data came in weaker than expected.
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