FXstreet.com (Barcelona) - After a mildly positive start, European markets have turned to negative territories weighed by rather disappointing macroeconomic data in Europe; Euro and Pound have been hit severely dropping about 200 pips each.

Fear has returned to European stock markets after UK GDP was reported to have contracted in the 4Q of 2008 at its fastest pace since 1980, suggesting that Europe is yet far from being out of the recession. Furthermore, Eurozone's new industrial orders have dropped well beyond expectations.

Risk aversion has showed up, and European markets have turned into negative territory; Eurostoxx 50 drops 1.00% at midday time in Europe, while German DAX drops 0.80% and French CAC drops 0.91%.

Euro and Pound Tumble

The Euro has declined by more tan 200 pips against the Dollar during the European trading session, after having been rejected at 1.3585, the EUR/USD has dropped below 1.3415 reaching a fresh 7-day low at 1.3365.

The Pound has been hit by heavy selling pressure and decline from 1.4495 on early European session has extended below 1.4335 moments after the release of GDP and current account figures, reaching as low as 1.4260. At the moment, the Pound is trying to return above 1.4335 (Mar 18 high).

USD/JPY recovery from 97.67 low reached in late Asian session seems to have stalled at 98.40 resistance level, and the Dollar has eased somewhat to levels around 98.00; at the moment the USD/JPY fluctuates between exponential moving averages in the hourly chart.