With the start of a new week, the European common currency is biased to the downside after the downbeat performance of the manufacturing and services sectors, where both contracted unexpectedly in April, indicating the euro-area region is slipping into deep recession.

The business cycle continued to decelerate in April, where the manufacturing and services sectors contracted further on weakening global and local demand. The escalating debt crisis in addition to the tension in the debt market spread fears and jitters Spain is following other indebted vulnerable nation into the debt-trap, which in result affected the sentiment and in result consumption and spending.

Moreover, data released today showed that the euro zone governments debt-to GDP (gross domestic product ratio) rose again in 2011, where the national debt of the euro zone inclined to 87.2% from 85.4%, raising fears the austerity taken by European nations most probably will fail to control rising debt while affecting growth sharply.

The European common currency cut some of the gains recorded in the past week against the U.S. dollar, where the euro in addition to other high yielding currencies including the sterling pound, the Australian dollar and the New Zealand dollar lost momentum as pessimism dominates the market, which weighed sharply on investors' appetite for risk.

We can see that the fourth largest economy in the euro zone moves European markets, where all eyes track any developments in the Spanish economy which suffers now the most from the escalating debt crisis, with fears the nation might seek bailouts soon in case yields on Spanish debt remained unsustainable.

We can see that rising yields in April forced pessimism to remain evident through the month, alongside other macroeconomic fundamentals that missed estimates as the frail data and sentiment regenerated fears and concerns the debt crisis will deepen and worsen further unless lawmakers intervene to calm jitters and tension in the debt market, with all European and global eyes concentrated on the ECB to revive the bond purchases program.

The EUR/USD declined sharply today, where the pair after reaching a high of $1.3209 reversed sharply to the downside recording the lowest at $1.3133. The pair opened the session at $1.3180 and trades now around 1.3142.

The GDP/USD declined sharply as well today, cutting some of the huge gain recorded in the past week, where the pair started the session today at $1.6119 and then declined affected by the downbeat European data, following the general sentiment in the market, reaching a low $1.6078.

The U.S. dollar index (USDIX), on the other hand, inclined to recover the losses incurred last week, where the dollar reached a high of 79.49 against other majors, after opening the session at 79.30.