The euro fell to a six-week low against the dollar on Thursday, after a report showed that industrial production in the eurozone fell unexpectedly in March, its first in six months.
EUR/USD extended its fall to hit 1.4135 during early European trading, reaching its lowest level since April 1.
A report from Eurostat showed that industrial output in the region fell 0.2 percent in March month-on-month, compared with the markets’ expectation of 0.3 percent increase.
Year-on-year, the output rose 5.3 percent in March against the analysts’ forecast of 6.3 percent gain. The output growth in Germany, the eurozone’s largest economy, slowed to 0.4 percent from 1.6 percent in February.
Analysts said that the single currency came under pressure from ongoing concerns over the debt restructuring of Greece.
“As a result of weak growth and sizeable fiscal slippages, Greece has reached the point where, under realistic scenarios, debt dynamics are unsustainable. The countdown to restructuring has started, in our view. But accepting insolvency does not make restructuring imminent. We argue that it may take longer than many think,” said Barclays Capital in a note.
Euro was also hurt by dampened speculations over interest rate hike by the European Central Bank (ECB) in June, after the bank’s President Jean-Claude Trichet made less hawkish comments last week.
Trichet in his opening remarks at the press conference on last Thursday did not use the phrase strong vigilance, which was widely expected as a signal to hike in interest rates.
“On balance, despite not using strong vigilance last week we still think there is a significant risk that the ECB could decide to hike rates in June. Certainly it remains the case that the combination of higher inflation outturns, higher staff inflation forecasts and an upside surprise to growth in Q1 are going to be very hard to pass up,” said Societe Generali in a note.