Forexpros – The euro dropped against the dollar on Friday on fears the European debt crisis will prompt monetary authorities there to buy Spanish bonds, while sluggish growth in China coupled sparked risk-off demand for the greenback.
In U.S. trading on Friday, EUR/USD was trading at 1.3082, down 0.80%, up from a session low of 1.3070 and off from a high of 1.3201.
The pair was likely to find support at 1.3034, Monday’s low, and resistance at 1.3201, the earlier high.
Rising yields in Spanish government bond auctions are sparking fears the debt crisis has spread to Madrid and to contain it, the European Central Bank might return to its policy of buying government bonds to lower borrowing costs and ease the continent’s financial woes.
The European Central Bank has made low-cost credit available to the continent’s banks in an effort to ease the crisis, but markets grew increasingly worried Friday that more direct intervention made be needed.
In China, the country’s gross domestic product grew 8.1% in the first quarter, below expectations for 8.3% growth and well beneath the fourth quarter’s 8.9% expansion, which prompted investors worldwide to snap up greenbacks on hint that looser policies come out of Beijing.
Meanwhile in the U.S., the country’s consumer price index rose 0.3% in March from February, in line with expectations, while core inflation rates, stripped of volatile food and energy prices, rose 0.2%, also in line with expectations.
The dollar, however, did battle headwinds of its own.
The Thomson Reuters/University of Michigan’s consumer sentiment fell to 75.7 for April from 76.2 in March, mainly due to fears the high gasoline prices will eat into household wallets.
On the U.S. employment front, weekly initial jobless claims hit an unexpected 380,000, above expectation for 355,000 claims last week.
The euro, meanwhile, was down against the pound and down against the yen, with EUR/GBP trading down 0.19% at 0.8248 and EUR/JPY down 0.71% and trading at 105.93.
On Monday, the pair will trade on any news suggesting European policy changes to assist Spain.
Also on Monday, the U.S. will release retail sales figures.
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