Forexpros – The euro trimmed losses against the U.S. dollar on Monday, after the release of U.S. economic data painted a mixed picture of the country’s economic recovery, while concerns over high Spanish borrowing costs persisted.
EUR/USD pulled away from 1.2994, the pair’s lowest since February 16, to hit 1.3048 during European afternoon trade, still down 0.21% on the day.
The pair was likely to find support at 1.2994, the session low and a two-month low and resistance at 1.3074, the session high.
Official data showed that retail sales in the U.S. increased more-than-expected in March, building on the previous month’s strong gain.
The Commerce Department said that retail sales rose 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.
A separate report showed that an index of manufacturing conditions in New York deteriorated in April, growing at the slowest pace since November.
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.
The euro briefly dipped 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 Jos? 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 eased off a 19-month low against the pound, with EUR/GBP shedding 0.19% to hit 0.8235 and retreated from a two-month low against the yen, with EUR/JPY down 0.41% to hit 105.38.
Also Monday, official data showed that 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.
The report said that export growth remained stable at 11% year-on-year, while import growth was up 7%.
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