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Euro near 4-month lows against Dollar on bleak euro zone outlook

Euro near 4-month lows against Dollar on bleak euro zone outlook

The Euro was trading near to four-month lows against the Dollar today, after low manufacturing and employment data from the Euro zone contributed further to concerns over the outlook for first quarter growth. The outlook on the single currency also remained weak among concerns over the potential implications of a bailout for Cyprus. Also, investors continued to stay cautious ahead of the outcome of the European Central Bank’s upcoming policy meeting tomorrow. It is said that the ECB is not expected to announce any changes to monetary policy; however investors are looking forward to President Mario Draghi’s comments at the bank’s post announcement press conference.

Meanwhile, Construction sector activity in the U.K. improved less than expected in March, remaining in decline for the fifth consecutive month. Markit reported that the U.K. construction purchasing managers’ index rose to a seasonally adjusted 47.2 in March from a reading of 46.8 in February. In other news, U.K. shop price inflation rose in March and the impact of the Pound’s weakness on import prices is starting to take effect. The Bank of England has also raised fears about the currency’s weakness and its impact on inflation.

On the FX Markets, GBP/USD finished the session lower, driven by the release of weaker than expected macroeconomic data from the UK where the UK Manufacturing PMI, as well as the latest UK Mortgage Approvals data came in lower than expected. In terms of technical levels, supports are seen at 1.5093, last week’s low, and then 1.5027 which is the March 20th low. Once below the psychologically important 1.5000 level, market participants will target 1.4832, the March 12th low.

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