EUR/USD steadies above 1.0800, looks to close third straight day lower
- EUR/USD extends slide amid uncertainty over ECB bond-buying programme.
- Retail sales in euro area declined by 11.2% in March.
- US Dollar Index remains on track to end the day above 100.
The EUR/USD pair fell for the third straight on Wednesday as the shared currency continues to have a difficult time finding demand amid the uncertainty surrounding the ECB's bond-buying programme. Reflecting the negative sentiment surrounding the euro area, the spread between 10-year Italian and German government bond yields hit the highest level in two weeks. As of writing, the pair was down 0.25% on the day at 1.0810.
Euro remains on the back foot
Earlier in the day, the Eurostat reported that Retail Sales in March declined by 11.2% on a monthly basis to come in worse than the market expectation of -8%. Furthermore, in its updated economic forecasts, the European Commission said the euro area GDP is expected to contract by 7.7% in 2020 before expanding by 6.3% in 2021.
Meanwhile, commenting on German Constitutional Court's (GCC) ruling on the ECB's bond-buying scheme, ECB Governing Council member François Villeroy de Galhau reiterated that the EU's Court of Justice reaffirmed that the ECB's actions are proportionate to its mandate.
“GCC's ruling should increase uncertainty regarding the future to such an extent as to be negative for EUR assets in general. Italian bond spreads should see further widening pressure and the euro face pressure,” said Nordea analysts.
On the other hand, the USD preserves its strength on Wednesday as investors started to get ready for a devastating NFP report on Friday. The ADP Research Institue's monthly report revealed that private sector employment in the US declined by more than 20 million in April. Boosted by risk-off flows, the US Dollar Index pushed higher and looks to end the day above the critical 100 handle.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
