The euro came off vis-Ã -vis the U.S. dollar today as the single currency tested bids around the US$ 1.3380 level and was capped around the US$ 1.3580 level. U.S. equity markets weakened on news that IBM was pulling out of a deal to acquire Sun Microsystems. Many traders are also hestiant to enter new long positions ahead of the upcoming release of corporate first quarter earnings. The common currency was also pressured lower on news that the International Monetary Fund has proposed that Central and Eastern European European Union members should be permitted to join the eurozone as quasi-members. The European Central Bank is strongly objected and countered by saying €œThe position of the European Central Bank is very well known: we consider the implementation of the treaty criteria to be indispensable. All the treaty, nothing but the treaty.€ ECB member Bini Smaghi called for €œverbal discipline€ from policymakers when discussing exchange rates. Data released in the eurozone today saw the EMU-16 producer price index decline 0.5% m/m and 1.8% y/y € its largest annual decline in ten years. Many traders believe these weak data will encourage the ECB to reduce interest rates further. Other data saw February retails ales off 0.6% and the Sentix investor confidence index improved to -35.3 from -42.7. In U.S. news, the March employment trends index fell 2.3% to 90.1. Dealers are talking about the Obama administration€™s statement that it may replace senior managers at U.S. financial institutions if they do not do an adequate job in turning their companies around. Euro bids are cited around the US$ 1.3245 level.
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