Forexpros – The euro continued its slide against the U.S. dollar on Wednesday, up slightly after hitting a four-month low, as Greece took another step towards exiting the eurozone when talks broke down anew among the country’s political parties to form a coalition government.
In Asian trading on Wednesday, EUR/USD was trading up 0.01% at 1.2731, up from a session low of 1.2728, and off from a high of 1.2738.
The pair was likely to test support at 1.2624, the low of Jan. 13, and resistance at 1.2957, the high of May 11.
Talks among Greek political parties broke down anew, with austerity serving as the stumbling block.
Leftist parties insist austerity measures are hurting the country regardless of the bailout money they bring in, and want to scrap commitments to cut spending and fire public-sector workers.
A interim government is increasingly likely be appointed later Wednesday, with new elections likely in early June.
New elections have been seen by many as a tipping point to Greece’s exit from the currency union, which could send shockwaves across all of Europe.
The news wasn’t all gloomy out of Europe, with bullish news hitting the wire out of Germany.
Gross domestic product in Europe’s largest economy grew by a seasonally adjusted 0.5% in the first quarter of 2012 from the previous quarter, above expectations for growth of 0.1%.
Year-on-year GDP growth came to 1.7%, outpacing expectations for 0.8% expansion.
The eurozone as a whole avoided a recession in the first quarter, with quarter-on-quarter GDP growth coming in flat, defying expectations for a contraction of 0.2%.
The eurozone economy contracted by 0.3% in the fourth quarter of 2011.
In the U.S., retail sales crept up 0.1% in April, falling short of expectations for a 0.2% gain, posting its weakest growth in four months.
Meanwhile, headline U.S. consumer prices, including food and energy costs, came in flat in April.
Core consumer prices, which are stripped of volatile food and energy prices, rose 0.2% in April, in line with expectations,
A Federal Reserve Bank of New York manufacturing activity index for the New York area jumped to 17.1 in May from 6.6 in April, far outpacing market calls for an 8.5 reading.
The euro, meanwhile, was up against the pound and up against the yen, with EUR/GBP up 0.06% at 0.7964 and EUR/JPY trading up 0.13% at 102.21.
Later Wednesday in Europe, eurozone inflation data will be released ahead of a speech by European Central Bank President Mario Draghi.
Also Wednesday, the U.S. will release official data on building permits and housing starts, followed by Federal Reserve data on the capacity utilization rate and industrial production.
Crude inventory data will publish as well the minutes of the Federal Reserve’s latest monetary policy meeting.
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