By ForexMansion.com
The EUR/USD pair snapped a three-day rise on lower confidence reports from the Euro-Zone, on debt woes that continue to stalk investors in Europe. Furthermore, the U.S. economy released its ADP report that estimated that U.S. companies added nearly 200.0 thousand jobs in March, coming ahead of the infamous jobs report on Friday.
Debt problems in Europe had significant spillover on the continent where further instability is expected, according to a paper published by the International Monetary Fund (IMF).
Standards & Poor’s rating agency downgraded Portugal and Greece’s debt rating following similar moves by Moody’s Investors Services and Fitch Rating Agency, while adding that further downgrades is expected if debt conditions in Europe fails to improve.
The study which was published on IMF website said that the debt crisis “has been the theater of sovereign credit-rating downgrades, widening of sovereign bond and credit default swap spreads, and pressures on stock markets,” adding that “Interestingly, financial markets throughout the euro area have been under pressure although credit-rating actions were concentrated in few countries such as Greece, Iceland, Ireland, Portugal and Spain”.
Tougher regulations are expected by the European Union Commission by September, while central banks across Europe have been struggling with moving the economic cycle into positive grounds.
Investors’ anticipation for Friday’s nonfarm payrolls and next week’s rate decision by ECB and BoE forced the euro to fall against majors; this comes ahead of a day filled with fundamentals from Europe.
At 07:55 GMT, the Germany economy is expected to show a drop in unemployment to 7.2 percent from 7.3 percent where the number of people out of work have probably dropped by 25.0 thousand in March, from the previous 52.0 thousand.
The news would support the euro as signs of strengthening in the German economy spread optimism among investors to target risky investments, where Germany is considered the engine of recovery in Europe.
Furthermore, the Euro-Zone will release the Flash Consumer Price Index at 09:00 GMT, which is expected to show that prices rose by 2.4 percent in March. The ECB is expected to hike rates by 25.0 basis points next week, causing further depreciation for the Euro against majors.
Further bearishness is expected tomorrow if the EUR/USD pair breaches 1.4060 to target a pivot support at 1.4015.
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