Concerns over Spain slammed the euro to the bottom of the recent three-month range at 1.3000 key level, as yields on long term 10-years bond hit new highs above 6.00% Friday. The overall mood continues to be risk averse; where high yielders risky assets seen under downside pressure with the start of the session after kicking off the new week with bearish gaps against the greenback.
There are several bond auctions this week; France will auction short term bonds,while Spain is to sell 12 and 18 months treasury bills Tuesday ; however eyes will be fixated towards Thursday's 2 and 10 years auction, as it will give further clues whether we're facing sustained pressure on Spain's ability to access the markets, which may lead to further contagion fears and put these debt-ridden countries in the viscous cycle anew.
We have seen some minor economic releases this morning; the Italian trade balance showed deficit narrowed to 1.11 billion from 4.35 billion in February, while the euro zone trade surplus narrowed to 3.7 Billion from the revised down 5.3 Billion.
The EUR/USD pair slumped trading just above the key 1.3000 support level after opening the day at 1.3065. The single currency is under the threat of breaking below this key support at 1.3000, where steady trading below the level shall signal further sell-off eying the major lows near 1.2650 areas.
Coming up this noon the Retails sales figures from the U.S. at 12:30 GMT, the figures are highly anticipated; as it may affirm further dollar strength on strong macroeconomics from the country, unless it misses forecasts and that may push the U.S dollar lower at least over Intraday basis. Retail sales headline is expected to show a slowdown in retailing activities to 0.4% from 1.1% in February, while the core component which excludes automobiles sales is also pointing downwards to 0.6% from 0.9%, meanwhile the empire state manufacturing index is expected at 18.1 from 20.2.
Later on the day net long-term TIC flows followed by business inventories and NAHB housing market index are set to be released.
The U.S. dollar index continues to benefit from the relatively good economic data, in addition to the euro's weakness which accounts for more than 40% of the index weight. The index started the session at 79.90 currently trading near the highs at 80.10, meanwhile its testing a critical area, where descending resistance alongside April's high reside. A sustained breach above 80.10-80.20 shall open the door towards continuing the bullish trend.