Weak investor confidence data out of the eurozone prompted investors to avoid the euro on Monday and snap up safe-haven dollar positions. In US trading, EUR/USD was down 0.16% at 1.2997, up from a session low of 1.2982 and off from a high of 1.3031. The pair was likely to find support at 1.2967, Friday’s low, and resistance at 1.3162, Thursday’s high. In Europe, the Sentix index of investor confidence for the eurozone dropped to -10.6 in March from -3.9 the previous month, worse than expectations for a decline to -5.2, which fueled dollar demand. Also on Monday, Spain reported that the number of unemployed people in the country rose far less than expected in February, jumping by 59,400 after a 132,100 increase during the previous month. Analysts were expecting the number of unemployed people to rise by 77,500 last month, which curbed the euro’s losses in earlier trading. The euro continued to see pressure from data released on Friday that revealed that the eurozone’s unemployment rate rose to a new record high of 11.9% in January from 11.8% the previous month. Analysts had expected the rate to remain unchanged at 11.8% in January. Meanwhile in the U.S., uncertainty continued to surround the USD85 billion in automatic spending cuts that began to take effect on Friday, which further bolstered the dollar’s safe-harbor appeal. Growing sentiments that Italy may hold new elections to end a political standoff in the Senate repelled investors away from the single currency as well. The euro, meanwhile, was down against the pound and down against the yen, with EUR/GBP trading down 0.44% at 0.8620, and EUR/JPY trading down 0.42% at 121.26. On Tuesday, the eurozone is to release final data on service-sector activity, while Span and Italy are to release individual reports. The eurozone will also release data on retail sales.
EasyForexNews Research Team