The Euro lost versus the US dollar in the previous European trading session as manufacturing and services output in the Euro Zone in September remained below 50 points, considered as the contraction territory. This adds pressure to the European Central Bank to have a more aggressive involvement to trigger growth in the struggling economy. Also a contributing factor to the decline of the single currency was the failed negotiation among the Greek leaders as to the spending cuts required by Greece's international lenders before fresh loans could be released to the indebted country. In today's European trading exchanges, the EUR/USD is expected to turn lower than the Greenback on persisting uncertainties in the Euro region.
Activity in the Euro area's manufacturing and services sectors gave rise to concern that recession in the region is deepening. Germany's economic releases came out better, while France's economic numbers disappointed the markets. The ECB's new bond-purchasing program is deemed by some analysts to limit the Euro's losses. However, Germany's opposition of the ECB's supervision over banks in the Euro Zone is expected to get in the way of the central bank's plan. Meanwhile, Spain was able to sell 10-year government bonds at an auction yesterday, with borrowing costs declining to the lowest level since January, but this failed to prop the single currency.
The want of progress as regards the negotiations among the Greek leaders is likely to drive down the Euro. Prime Minister Antonis Samaras received a third refusal from Pasok leader Evangelos Venizelos and Democratic Left leader Fotis Kouvelis as to the budget cut-package required by the Hellenic Republic's international lenders to allow the flow of another tranche of bailout funds. The troika and Greece's finance minister have been locked in talks for two weeks with regard to spending cuts, and failure to reach an agreement risks the membership of Greece in the Euro Zone. Given the clouded outlook for the Euro Zone economy, the shared currency is seen to drop. Thus, a sell bias is suggested for the Euro-Dollar pair in today's European trades.
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