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Forex - EUR/USD hits fresh 2-1/2 month lows after GDP miss

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Investing.com -

Investing.com - The euro fell to fresh two-and-a-half month lows against the dollar on Thursday after data showed that the euro zone economy grew at a slower-than-expected rate in the first quarter, adding to pressure on the European Central Bank act to shore up the recovery in the region.

EUR/USD was last down 0.43% to 1.3656, the weakest level since February 27.

The pair was likely to find support at 1.3600 and resistance at 1.3722, the session high.

The drop in the euro came after Eurostat said the euro zone's gross domestic product grew just 0.2% in the first quarter, compared to expectations for growth of 0.4%.

On a year-over-year basis the bloc's economy expanded 0.9%, falling short of expectations for growth of 1.1%.

The French economy stagnated in the first three months of the year, while Italy, Portugal and the Netherlands all reported contractions.

Germany's economy, the euro zone's largest, outperformed in the first three months of the year, expanding 0.8%, beating expectations of 0.7%.

Separately, Eurostat reported that the annual rate of inflation in the euro zone was unchanged at 0.7% in April, in line with forecasts. The inflation rate is still well below the ECB's target of close to but just under 2%.

Elsewhere Thursday, comments from a senior EBC official fuelled speculation that the bank is preparing to act at its next meeting in June to shore up the recovery in the currency bloc and stop inflation from falling too low.

In an interview with The Wall Street Journal, ECB Vice President Vitor Constancio said the central bank was open to more monetary easing and was determined to act swiftly if required.

The euro hit fresh two-and-a-half month lows against the yen, with EUR/JPY down 0.41% to 139.15

Elsewhere, the single currency was weaker against sterling, with EUR/GBP down 0.31% to 0.8153, not far from the 16-month trough of 0.8126 reached on Wednesday.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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