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EUR/USD Extends Gains after Weak US Data

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EUR/USD Extends Gains after Weak US Data

The EURUSD pair was higher Friday, as disappointing US data weighed on the greenback amid escalating tensions in the Ukraine.

The pair, which set a fresh two-year high of 1.3966 yesterday, was trading in positive territory in North America’s afternoon session. As of 19:00 GMT, the EURUSD was trading at 1.3905, a gain of 30 pips.

In a preliminary estimate, Thomson Reuters and the University of Michigan said consumer sentiment declined in March. The Consumer Sentiment Index fell from 81.6 to 79.9, a four-month low. The index suggests household spending may be slow to pick up, despite yesterday’s upbeat retail sales report.

The consumer sentiment report came after government data showed US producer inflation unexpectedly declined in February. Compared to the previous 12 months, inflation at the producer level rose just 0.9 percent, well below forecasts.

Geopolitical tensions in eastern Europe capped the euro’s gains, as risk aversion continued to underlie the financial markets. The forex market was trading cautiously at the end of the week as Russia launched new military drills near its border with the Ukraine. With the Crimea region set to vote this weekend about whether to secede from the Ukraine, Russia has said it will respect the results of the referendum, which are widely expected to support secession.

In other trading, the US dollar lost significant ground against the Japanese yen. The USDJPY pair fell more than half a percent to 101.28, its lowest level in 11 days.

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