Investing.com - The euro gained ground against the softer dollar on Wednesday after the latest U.S. trade data indicated that the economy may have contracted in the first quarter.
EUR/USD was up 0.51% to 1.1243, not far from the two-month high of 1.1289 set last Thursday.
The drop in the dollar came after the Commerce Department said Tuesday the trade deficit widened by 43.1% to $51.4 billion in March, the largest since October 2008, due to a jump in imports.
The trade gap was far larger than assumed in the government's initial estimate of first quarter growth last week, fuelling fears that the U.S. economy may have contracted in the first three months of the year.
The single currency was boosted as German 10-year bund yields rose to their highest level this year, narrowing the gap with their U.S. counterparts.
The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was down 0.41% to 94.88, re-approaching the two-month low of 94.47 set last Thursday.
The dollar dipped against the yen, with USD/JPY easing to 119.75.
Financial markets remained closed in Japan on Wednesday for the Golden Week holidays. Trading was to resume on Thursday.
Investors were looking ahead to the ADP report on private sector jobs growth later in the day ahead of Friday's government report, as well as a speech by Federal Reserve Chair Janet Yellen, which would be closely watched for any indications on the timing of the first hike in interest rates.
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