Forexpros - The euro moved sharply lower against the U.S. dollar Thursday, as better-than-expected U.S. data lifted the greenback, while nonstop worries about the economic outlook for the euro zone weighed on the single currency.
EUR/USD hit 1.2275 during U.S. afternoon trade, after trading as high as 1.2388 and as low as 1.2268 during the session.
The pair was likely to find support at 1.2224, the low of July 30 and resistance at 1.2386, the session high.
The greenback was lifted when the Department of Labor reported the number of people who filed for unemployment assistance in the U.S. declined to 361,000 last week, from an upwardly revised 367,000 in the previous week, against expectations for an increase to 370,000.
A separate report indicated the U.S. trade deficit dropped to USD42.9 billion in June, its lowest level in two-and-a-half years on the back of lower oil prices, from a downwardly revised USD48.0 billion the previous month.
Analysts had expected a U.S. trade deficit of USD47.5 billion in June.
Sentiment on the euro was hit by fading optimism that the European Central Bank will soon move to stem the debt crisis in the euro zone, as investors waited for more details of the bank’s proposed bond buying program to emerge.
Earlier Thursday, the ECB said in its monthly bulletin that the economic outlook for the euro zone faced a number of downside risks, with financial market tensions and their potential impact on growth posing the key threats.
The ECB revised down its forecast for economic growth to 0.6% in 2013, down from 1% previously and forecast a 0.3% contraction in growth this year, slightly worse than its previous forecast of for a 0.2% contraction.
The euro had been slightly higher against the greenback during the Asian session, as risk assets were buoyed up by prospects for further monetary stimulus by China.
Official data showed that consumer inflation slowed in July from the previous month, indicating that China’s central bank has more scope for monetary easing, following interest rates cuts in June and July.
The euro was lower against the pound and the yen, with EUR/GBP down 0.25% to 0.7877 and EUR/JPY slipping 0.13% to 96.84.
In the U.K., official data showed that the trade deficit jumped to GBP10.1 billion in June, up from GBP8.36 billion in May, on the back of a 7% drop in exports. Analysts had expected the U.K. trade deficit to tick up to GBP8.6 billion in June.
The data was released one day after the Bank of England said that the U.K. economy would barely grow this year and cut its forecasts for the coming years in its quarterly inflation report.
