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Euro holds steady after Weidmann comments
The euro has gained some ground versus the US dollar, after Jens Weidmann stated an appetite for eurozone bonds could strengthen the currency.
The EUR/USD pair is trading at $1.3708, up 0.1% on the day, after Jens Weidmann of the Deutsche Bundesbank stated it would be ‘short sighted to take a one-dimensional view of the exchange rate’. It should be noted that Mr Weidmann is on the hawkish side of the European Central Bank divide. Yields on eurozone governments bonds are very low, and Mr Weidmann feels the demand for sovereign debt could rise if the euro falls in value.
Construction activity in the eurozone declined in March, which puts additional pressure on the ECB to begin monetary easing, and there is the speculation this will begin next month. We are not expecting any major economic data from the eurozone today; tomorrow Germany will announce its producer price index at 7am (London time).
As I stated that previously, the euro has been trading within a tight range recently, and if tomorrows German PPI figures are poor we could approach the $1.3660 level. We would need very strong data from Germany to reach the 200-hour moving average of $1.3769.