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Forexpros – The euro traded slightly lower against the U.S. dollar on the heels of positive U.S. retail sales data as continued Spanish debt concerns weigh on the single currency.

EUR/USD hit 1.229 during U.S. morning trade, the pair’s lowest since February 16; the pair subsequently traded at 1.3071 down 0.05%.

The pair was likely to find support at 1.2974, the low of February 16 and resistance at 1.3111, the high of April 4.

The greenback’s strength was triggered when government data indicated retail sales in the U.S. increased more-than-expected in March, building on the previous month’s strong gain.

The U.S. Commerce Department reported that retail sales increased by a seasonally adjusted 0.8% in March, beating expectations for a modest 0.3% gain.

February’s figure was revised to a 1.0% increase from a previously reported gain of 1.1%.

Core retail sales, which exclude automobile sales, rose by 0.8% last month, above expectations for a 0.6% gain, after rising by 0.9% in February.

However, another report indicated an index of manufacturing conditions in New York deteriorated in April, growing at the slowest pace since November, capping enthusiasm for the U.S. dollar.

The Federal Reserve Bank of New York said that its general business conditions index declined by 13.6 points to 6.6 in April from 20.2 in March.
Analysts had expected the index to decline by 2.2 points to 18.0 in April.

Spanish debt remains in the spotlight with the euro briefly dipping below the 1.30 level against the dollar earlier Monday after the yield on Spanish 10-year bonds climbed above 6% amid concerns that the government will be unable to meet deficit reduction targets.

European Commission president José Manuel Barroso said Monday that he was “absolutely confident that Spain can meet its economic challenges”.

Investors looked set to remain cautious ahead of an auction of two and 10-year Spanish governments bonds later in the week, which was being seen as a key test of market appetite for the country’s debt.

Meanwhile, speculation continued over whether the European Central Bank would resume purchasing government bonds on the secondary market in order to ease mounting pressure on Spain.

Elsewhere, the euro was also lower against the pound with EUR/GBP giving back 0.21%, to hit 0.8235.

In addition, Monday government data indicated the euro zone posted an external trade surplus of EUR2.8 billion in February, against a deficit of EUR2.8 billion in the same month last year.