The euro rallied to a six-week high against the U.S. dollar on Friday, amid optimism that Greece and its creditors would reach an agreement on a debt swap deal.

There was also a weaker-than-expected forecast for the U.S. on Friday, especially with data showing that the U.S. economy grew slower than expected in the fourth quarter of 2011.

European Union economic affairs chief Ollie Rehn said a deal on reducing Greece’s private sector debt was “imminent” and could be completed by next week.

The euro rallied to a six-week high against the U.S. dollar on Friday, amid optimism that Greece and its creditors would reach an agreement on a debt swap deal.

There was also a weaker-than-expected forecast for the U.S. on Friday, especially with data showing that the U.S. economy grew slower than expected in the fourth quarter of 2011.

European Union economic affairs chief Ollie Rehn said a deal on reducing Greece’s private sector debt was “imminent” and could be completed by next week.

The euro continued to hold gains after Fitch Ratings downgraded Italy, Spain, Belgium, Cyprus and Slovenia’s sovereign debt ratings, saying they lack financing flexibility in the face of the regional debt crisis. An agreement is necessary for Greece to secure the next tranche of bailout funds to prevent a sovereign debt default.

Greece does not have enough money to cover a €14.5 billion bond repayment due March 20. In the coming week investors will be closely watching developments in Greece as well as the outcome of today’s EU summit.

Today Italy is to hold an auction of long term government bonds, which will be an important test of demand for the country’s debt. The U.S. is to publish government data on personal consumption expenditure, which is a leading indicator of inflation, followed by data on personal spending which accounts for a majority of overall economic activity.

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