Europe Economic Data Extends Euro’s Downtrend

The euro is going to finish another week posting losses versus most of the 16 main traded currencies after GDP figures published today for the European Union showed worse-than-expected numbers for the region which is already suffering from Greece’s financial crisis.

Economic figures published today for the last quarter of 2009 showed that the economic recovery in the European Union lost traction as the data was considerably below forecasts, evidencing the economic problems in the region and fueling speculations that the budget deficit crisis in countries like Greece and Portugal may spread to other bloc’s nations and affect the euro’s attractiveness even further, as several investment funds around the world are already avoiding to inject capital in the most fragile Eurozone member countries, specially in the case of Greece. China’s new lending reserve requirements added to pessimism in trading markets, pushing the euro to the lowest level in 2010 versus the greenback.

The situation in the Eurozone is worsening, and the dynamism and resilience expected for the region was frustrated, that is the main driver behind the euro’s decline that started in the last December and is likely to continue for a while.

EUR/USD traded at 1.3608 as of 15:56 GMT from a previous rate of 1.3692 yesterday. EUR/JPY remained rather stable at 122.43.

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