The euro held close to four-month lows against the dollar on Thursday amid uncertainty as to how Cyprus will raise EUR5.8 billion needed to free up multilateral bailout money. The Cypriot parliament rejected a EU proposal to slap taxes on bank deposits, though the country must still find ways to raise EUR5.8 billion if it wishes to tap a EUR10 billion financial assistance package arranged by its European neighbors and the IMF. A bank holiday remains in effect until Monday, which gives European policymakers more time to find a way out of the crisis. Plus the European Central Bank has said it will ensure that liquidity flows into the island nation’s banking system, which bolstered the euro somewhat, though softer-than-expected economic indicators kept the pair in negative territory. Meanwhile, manufacturing figures fell short of expectations in Europe, which also pushed the single currency down. The eurozone’s manufacturing purchasing managers’ index hit a three-month low of 46.6 in March from 47.9 in February, defying expectations for a gain to 48.2. The eurozone services PMI, meanwhile, dropped to a five-month low of 46.5 in March from 47.9 in February, also defying expectations for a gain to 48.2. Germany’s manufacturing PMI fell to 48.9 in March from 50.3 the previous month, missing market calls for a 50.5 reading while the country’s service-sector expanded at the slowest rate in four months. The French manufacturing PMI came in at 43.9 in March, unchanged from February’s reading, while service sector activity in France fell to a 49-month low of 41.9. On Friday, expect the pair to move on German business sentiment data. EUR/USD was down 0.25% at 1.2893. EUR/GBP trading down at 0.8502, and EUR/JPY trading down at 122.17.
EasyForexNews Research Team