The sentiment deteriorated in the market today after the downbeat manufacturing and unemployment figures from the euro-area region, where unemployment surged again in February reaching the highest level recorded since creating the monetary union, while the manufacturing sector remained in contraction in March, the thing that sent the euro south against other major currencies.
The euro zone manufacturing sector continued to contract for the eighth consecutive month in March, adding more signs that the euro-area region is heading towards another round of recession as growth may not pick up anytime soon, while jobless rate is rising, the thing that spread fears that Europe may not be on the right track of recovery and now European lawmakers must take further steps to shield large nations and prevent the contagion from spreading further.
The euro zone downbeat unemployment and manufacturing data were in line with expectations to be honest; however, the sharp decline in the performance of the French manufacturing sector was the reason behind the pessimism in Europe, where the second largest economy in the euro zone seems to be affected sharply by the austerity measures adopted across Europe and also by the global slowdown, the thing that renewed fears that larger economies are on the verge of recession.
As mentioned before the slowdown in the performance of the manufacturing sector of the entire euro zone was led by the sharp contraction of the French manufacturing sector, which slumped to 46.7, which is the lowest since June 2009, from the previous of 50.0.
The EUR/USD pair retreated to a low of $1.3324 after the news from a high of $1.3380, noting that the pair started the session at 1.3359 and is currently hovering around $1.3329.
The sterling pound was able to hold onto some of the gains recorded earlier; however, the royal currency looks weak against the U.S. dollar as the pessimism in Europe affected demand for high yielding currencies, including the pound.
The GBP/USD pair is currently hovering around 1.6030, after recording the highest at $1.6062 and the lowest at $1.5978, noting that the pair started the session at $1.6021.
Volatility is still seen in the market, where all eyes are still tracking the performance of the manufacturing sector from the world's largest economy, with expectations the manufacturing sector could have expanded further in March to 53.0 from 52.4.
The U.S. dollar index (USDIX), which tracks the dollar's movement against other majors, is trading now around 78.94, after recording the highest at 79.03 and the lowest at 78.78, noting that the index started the session at 78.87.