Euro Advances Against Majors

(RTTNews) - The euro strengthened against other major currencies in the European session on Thursday, as the U.S. dollar suffered due to concerns about the country's short-term economic prospects and the continuous imposition of tariffs on trading partners. The euro was also supported by economic data.

Additionally, reports showed that Spanish Prime Minister Pedro Sanchez said that his government will respond to U.S. tariffs with €14.1 billion plan to protect the Spanish economy.

Markets anticipate that Trump's tariffs will cause the U.S. economy and the rest of the world to slow down. New import taxes, according to experts, are larger than anticipated and enough to plunge the U.S. economy into a recession. Assuming that rising taxes will dampen the Fed's (Fed) attempts to control sticky inflationary pressures, such a situation sets the stage for stagflation. This will make it more difficult for the Fed to keep inflation close to the 2% objective while full employment is in place.

In economic news, data from Eurostat showed that Eurozone producer price inflation accelerated notably in February on surging energy prices. Producer prices logged an annual growth of 3.0 percent in February, following January's 1.7 percent increase.

Excluding energy, producer price inflation rose only marginally to 1.4 percent from 1.3 percent in January.

On a monthly basis, producer prices grew only 0.2 percent in February. Prices were expected to grow 0.3 percent after rising 0.7 percent in February.

Producer prices in the EU27 rose 0.3 percent month-on-month in February, taking the annual growth to 3.1 percent.

Data from S&P Global showed that the euro area private sector growth accelerated to a seven-month high in March, adding to hopes of recovery in the currency bloc as the fiscal support planned by Germany is more likely to offset the threats caused by the U.S. tariffs. The HCOB composite output index ticked up to 50.9 in March from 50.2 in February. The flash score was 50.4.

The services Purchasing Managers' Index improved to 51.0 in March from 50.6 in February. The reading was above the flash reading of 50.4.

In the European trading, the euro rose to more than a 3-week high of 0.8441 against the pound and more than a 6-month high of 1.1146 against the U.S. dollar, from early lows of 0.8349 and 1.0880, respectively. If the euro extends its uptrend, it is likely to find resistance around 0.85 against the pound and 1.12 against the greenback.

Against the yen and the Swiss franc, the euro advanced to 163.05 and 0.9579 from an early near a 3-week low of 160.64 and a 2-day low of 0.9521, respectively. The euro may test resistance around 165.00 against the yen and 0.97 against the franc.

Looking ahead, Eurostat is set to release euro area producer prices for February at 5:00 am ET in the European session. Prices are forecast to grow 0.3 percent on month, following a 0.8 percent rise in January.

At 7:30 am ET, the European Central Bank publishes the account of the governing council meeting held on March 5 and 6.

In the New York session, Canada and U.S. trade data for February, U.S. weekly jobless claims data, U.S. and Canada S&P Global PMI data for March, are slated for release.