01, May 2013

EUR/USD (a 4-hour chart)

EUR/USD (a 4-hour chart)

Euro refuses to fall despite the growing evidence that the eurozone economy is in a trouble. According to recent reports, consumer spending and consumer confidence index showed a further weakening in April, and this time, the deterioration is led by France and Italy, as demand in the second and third largest economies in the euro zone continues to suffer from a slow growth and austerity measures.

Even Germany has shown a slight decline in retail sales in April, and this pullback in demand in the region has led to weak job creation and job losses in the retail trade.

It is not surprising as the Economic Confidence also fell last month and there is a good chance that the German retail sales and unemployment will also show a decline.

Investors expect that the ECB will lower its key interest rate by a quarter percentage point and will announce a new initiative aimed at increasing lending to small and medium companies the eurozone, which have experienced difficulties in raising the necessary capital.

63 economists of 70 surveyed by Bloomberg, expect the central bank will cut interest rates.

Although the decline in interest rates tends to put pressure on the national currency, the euro is supported by any evidence that eurozone leaders are taking steps to resolve the economic and financial problems of the region. The ECB will announce its decision on the future policy on Thursday.