Euro back near 12-year low against dollar as market awaits US sales data

The euro has fallen back near last month's 12-year low against the dollar as traders increased the odds for a sooner US rate hike, while concerns that China is slowing attracted investors more towards the world's largest economy.

The EUR/USD fell to 1.0520 on Monday (13 April), its lowest since 16 March, before rebounding to 1.0567 at the day's close. The pair has been showing weakness on Tuesday as well and traded at 1.0546 as at 6:50 GMT. The euro was down as much as $1.0462 on 13 March, a 12-year low.

The currency had rallied more than 5% within a week of hitting the multi-year low but has failed to break above 1.1100 despite several attempts. And the 3.4% drop over the last week opened the case for a new low for the euro.

The market is now waiting for US retail sales data for March, due later in the day, and then the China gross domestic product data for the first quarter of this year, scheduled for Wednesday (15 April).

Analysts have forecast a rebound in retail sales to 1.1% on month in March from a 0.6% fall in February while China's annual GDP growth is forecast to have eased to a new multi-year low of 7% from a five-year low of 7.3% in the fourth quarter of 2014.

ECB policy decision

No major data has been scheduled for the eurozone in the next few days but the European Central Bank policy decision and the press conference by its president Mario Draghi could move the market on Thursday (16 April).

Against the pound, the euro has fallen to a three-week low of 0.7188 and a 22-month low of 126.21 against the yen. The market is now looking forward to the UK CPI data for March scheduled for later in the day while comments by a Japanese government official that the yen is weak has aided the Japanese currency's gains.

Koichi Hamada, an adviser to Japanese Prime Minister Shinzo Abe, said that the country's monetary policy is working and the yen is weak in terms of purchasing power. The comments eased speculation that the Bank of Japan will expand its stimulus programme, and pushed the currency up across the board.

The USD/JPY has moved off a three-week high of 120.86 on Monday and has traded at a one-week low of 119.66 on Tuesday.