Euro at a 2-week low versus the dollar
The euro huddled at a two week low against the dollar on Thursday, as weak eurozone data pulled the single currency below key market level as the pound steadied when British policymakers seek consensus to exit the European Union.
“Euro zone data has been quite disappointing and that is prompting the euro to underperform the struggling dollar in the opening weeks of the year,” said Alvin Tan, a currency strategist at Societe Generale in London.
The euro EUR=EBS held at $1.1398, broadly flat against the dollar. It briefly reached a low of $1.1371 in the Asian session, its lowest level since Jan. 4. The single currency has dropped 1.7% over the last week as weak data has weighed.
This week’s data showed that the German economy increased by 1.5% in 2018, the worst expansion rate in five years, while inflation data in the euro zone earlier showed price pressures receding further from the target of the central bank, complicating the situation for the European Central Bank, which is currently expecting to raise interest rates later this year.
The weakness of the euro comes at a time when the dollar struggled to gain momentum, after only five rise last year, with market watchers becoming increasingly pessimistic about the greenback’s prospect.
On Jan. 10, the dollar .DXY almost dropped below its 200-day moving average when the index hit a three-month low of 95.029. Since then it has rebounded but is still down 0.1% so far this month.
The long dollar, or buying and holding the dollar, was the most crowded trade in the monthly fund manager survey of Bank of America Merrill Lynch for the second consecutive month in January.
“We think the dollar is actually subject to downside risk because the market is still very long the currency and at the same time the dollar is likely to lose its rate advantage due to the Fed being closer to a pause in its tightening,” said Manuel Oliveri, currency strategist at Credit Agricole in London.