The euro started the week with heavy bearishness as the EUR/USD head south in the European session with mounting losses amid the lack of data and prevailing debt woes.
The 76 billion austerity measures through 2015 announced Friday by Greece were not compelling enough to convince the market of the government's pledges to not restructure debt, as fears extended over the needed and inflamed over possible default!
Further debt woes were spreading from the Finnish elections. Euro-skeptics gained grounds and it became more eminent for a possible block to Portugal's aid package or at least amendments to the bailout, which either or will be bearish on the euro and prospects for stability. While the odds of passing the EFSF bailout for Portugal without the 17-nation approval will further undermine the euro's appeal and degrade investor's confidence in the area.
The market started off bearishly amid the lack of data, yet with good data on the queue and ongoing recovery signs with the start of the earnings season, the euro has still the capability to shun the skeptics and rise again versus the weak dollar today as the ECB is likely to raise rates twice again this year opposed to a vigilant and dovish feds.
Tuesday will be a busy day for the market with the short week upon us. Heavy data is scheduled for release which will affect the market heavily amid high volatility and debt woes.
A busy day for European investors where Manufacturing and Services data from the Euro Zone is scheduled to be released at 08:00 GMT, along with current account data that that will be released at 09:00 GMT, which may force the pair to witness further volatility in trading.
If the manufacturing and services data came better than expected, the pair is expected to rise and trim some of the losses. The start will be with the 7:30 GMT with the German Advanced PMI Manufacturing, expected slightly lower at 60.0 from 60.9 but still strong. While PMI Services is expected with more declines to 59.8 from 60.1 though also remains strong.
At 8:00 GMT EU Composite PMI expected at 57.0 from 57.6, as Manufacturing PMI is to slow to 57.0 from 57.5 and Services to 56.9 from 57.2.
The Current Account in February also at 08:00 might be support for the euro as the deficit might contract, especially after the shrinking in the trade deficit recorded that month. Construction spending is awaited at 09:00 GMT and will be less important for the market compared to the industry figures before.
Also, the US housing data will influence the market, especially with eyes on the dollar attempted to hold back its gains, though still reluctant to remain strong as the Feds keep their dovish bias intact and supporting the dollar weakness. AT 12:30 GMT Housing Starts are expected with 8.6% rise following 22.5 % slump to 520 thousand and Building Permits are expected while Building Permits are expected with 1.1% gain from 8.2% drop to 540 thousand.
The good housing data if the sentiment turned positive will be support for the euro rather than the dollar, yet shall a combination of debt woes and weak European sector data be seen the dollar then will gain grounds.
Originally posted here
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