The euro started the week on Monday under heavy downside pressures with growing debt fears and downbeat economic data signaling the slowing recovery in the euro area. The market was very pessimistic on the outlook for the fiscal stability and the crisis fueled haven demand and deepened the euro's losses versus the dollar.
Debt fears intensified after Fitch on Friday downgraded Greece's credit rating again by three steps and warned of the outlook shall the EU and the IMF did not aid Greece. The news were followed by S&P's decision over the weekend to downgrade the outlook for Italy's credit rating to “negative” citing risk from the political instability to hinder the plans to cut the surging debt.
The losses extended after the stronger than expected slowing in manufacturing and services activity in the euro area which added to fears of the slowing global recovery.
The sentiment remains bearish and fears over the outlook for the euro area's fiscal health and the recovery and keeping the euro under negative pressure and forcing the EUR/USD lower as greenback rallies on haven demand and unwinding of risk.
On Tuesday the start is at 06:00 GMT with the final revision for the German first quarter GDP which is likely unrevised at its strong 1.5% expansion. Also Germany's IFO business survey will be watched at 08:00 GMT where the drop in confidence seen lately is still ongoing due to the uncertain outlook, debt woes in the euro area, and rising inflation and commodity prices which are pressuring the sentiment.
The euro area's industrial orders for March are due at 09:00 GMT are marginally expected to affect the currency following the early news, and especially as we already saw factory orders drop heavily on the month and likely the same will be seen.
At 14:00 GMT, the U.S. will release the new home sales index for the month of April, where new home sales are expected to rise by 1.7% to an annual rate of 305,000 units, compared with the prior estimate of 300,000 units, although the housing market showed further weakness in April, as the housing market remains depressed.
Originally posted here
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