EUR/USD Fundamental Outlook at 1500 GMT (EST + 0500)

The euro depreciated vis--vis the U.S. dollar today as the single currency tested bids around the US$ 1.5510 level and was capped around the $1.5695 level. The common currency erased most of yesterdays gains as traders reacted to disappointing retail sales data from the eurozone. EMU-15 February retail sales fell 0.5% m/m and 0.2% y/y, below expectations, on account of weaker consumer spending in Germany. Other data released today saw EMU-15 March services PMI print at 51.6 while German March final services PMI slipped to 51.8. These weaker data could scale back expectations that European Central Bank may tighten monetary policy on account of significantly elevated inflation rates. In U.S. news, weekly initial jobless claims rose 38,000 to 407,000 while continuing jobless claims gained 97,000 to 2.937 million. It was also reported that the March services ISM index improved to 49.6 from 49.3. Traders await tomorrows February non-farm payrolls data. Federal Reserve Chairman Bernanke and other high-ranking officials testified today about their role in the failure of U.S. investment bank Bear Stearns. Euro bids are cited around the US$ 1.5345 level.