The Euro advanced on the US Dollar at the close of last week as the US published unexpectedly poor employment figures for March.
Economists had expected the US economy to add 245,000 positions last month, but the actual result was a much less inspiring 126,000.
It wasn’t an entirely negative report given that the jobless rate held at 5.5% and average earnings increased. That being said, the smaller-than-anticipated jobs gain did cause some investors to pare back their expectations regarding the first increase in US interest rates, and the US Dollar softened accordingly.
On Friday the Euro was also deriving support from the assertion that Greece won’t default on its repayment to the International Monetary Fund (IMF).
However, the situation was markedly different as markets reopened following the four-day Easter break. While the US Dollar was clawing back earlier losses ahead of the publication of minutes from the latest Federal Open Market Committee (FOMC) policy meeting, the Euro was pressured lower by the lack of progress in the Greek bailout negotiations.
Demand for the common currency also suffered as the Eurozone’s Services and Composite PMI’s for March were revised down from previous estimates.
While respective readings of 54.3 and 54.1 were expected, the gauges printed at 54.0 and 54.2.
Markit Economist Chris Williamson said of the result; ‘The PMIs are indicating somewhat sluggish GDP growth of 0.3% for the first quarter. However, the important message from the survey data is that the pace of expansion looks set to gather pace in coming months.’
The Eurozone’s Sentix Investor Confidence figure also failed to advance to 20.8, as projected, but instead increased from 18.6 to 20.
Over the course of Tuesday’s European session, the Euro to US Dollar (EUR/USD) exchange rate lost 0.7% on the day’s opening levels to trade in the region of 1.0859.
On Wednesday Germany’s Factory Orders report and Retail/Construction PMIs may give the Euro a lift, but as the Eurozone’s retail sales report for February is expected to show a decline on the month, gains could be limited.
Economists with an interest in the Euro to US Dollar (EUR/USD) exchange rate will also be focusing on the week’s German trade balance/industrial production numbers and the FOMC minutes.
If the minutes contain any mildly hawkish references to the timeline for raising US interest rates, the Euro could fall further still against its US counterpart.
The situation in Greece will also be closely monitored, particularly given the fact that Greece is meeting with Russia later in the week.
On Tuesday the Euro to US Dollar (EUR/USD) exchange rate hit a low of 1.0832