Forex - EUR/JPY erases losses stemming from Draghi comments

A A A - The euro rose against the yen on Monday after bottom fishers viewed the currency as nicely priced.

The single currency fell against most other currencies earlier after European Central Bank President Mario Draghi said more rate cuts were possible if the economy deteriorates any further.

In U.S. trading on Tuesday, EUR/JPY was up 0.07% at 130.03, up from a low of 129.61 and off a high of 130.41.

The pair sought to test support at 129.61, the earlier low, and resistance at 130.67, the high from April 22.

The European Central Bank recently trimmed benchmark interest rates by 25 basis points to 0.50%, though further action could be necessary if the economy doesn't gain steam, Draghi said in Rome earlier Monday, which weakened the euro to levels ripe for bargain hunting against the yen.

Last week, the eurozone's unemployment rate hit a record 12.1% in March, while the consumer price index dipped down to 1.2% in April, well below the ECB's 2% inflation target.

Elsewhere on Monday, Eurostat, the statistical arm of the European Union, reported that retail sales fell 0.1% in March, in line with expectations.

Retail sales for February were revised to a 0.2% decline from a previously reported 0.3% drop.

Year-over-year, retail sales dropped 2.4% in March, worse than expectations for a 2.2% decline, after falling 1.7% in February.

Confidence in the currency zone's economy remains fragile, industry data shows.

Market research group Sentix reported earlier that its index of investor confidence improved to -15.6 in May from a reading of -17.3 in April.

However, analysts were expecting the index to improve a little more and come to -15.2 this month.

On the index, a level above 0.0 indicates optimism, below indicates pessimism.

Elsewhere, data released earlier by Markit Economics revealed that its eurozone's service-sector index rose to 47.0 in April from 46.6 in March.

Analysts had expected the number to remain unchanged at 46.6.

In Spain, the number of unemployed people declined unexpectedly in April, falling for the second consecutive month, official data showed on Monday.

The Spanish government said earlier the number of unemployed people in the country fell by 46,100 in April, defying expectations for an increase of 17,100.

The number of unemployed people in Spain declined by 5,000 in March.

The euro, meanwhile, was down against the pound and down against the U.S. dollar, with EUR/GBP trading down 0.12% at 0.8414 and EUR/USD trading down 0.30% at 1.3079.

On Tuesday, Germany is to release official data on factory orders, while France is to produce data on industrial production.
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This article appears in: Investing , Forex and Currencies

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