NEW YORK (AFX) - The euro remained well underpinned against the dollar and other major currencies, as slightly weaker-than-expected U.S. retail sales and PPI data sparked fresh hopes of an inter-meeting reduction in U.S. interest rates, dealers said.
Sean Callow, a currency strategist with IDEAGlobal, said the euro also benefited from a wave of short-covering ahead of the long Easter holiday weekend.
"I think people got too bearish on the euro and then they suddenly went short," he said, adding investors shrugged off yesterday's decision by the European Central Bank's decision to leave key interest rates unchanged.
Economists said the ECB is unlikely to lower rates at its next meeting on April 26 and could even hold off until as late as June. The retail sales data were seen as particularly weak, showing that recent interest rate cuts have yet to boost consumer demand in the U.S. economy. U.S. retail sales fell 0.2 pct in March, weaker than the consensus forecast, with retail sales excluding autos falling 0.1 pct -- also weaker than expected. For the near term, the euro is expected to trade rangebound between a low of 0.8840 usd and a high of 0.8970, traders said. Sterling continued to draw strength from selling in the dollar following the release of weaker-than-expected U.S. economic indicators, Callow said. British Chamber of Commerce's figures, which showed that the UK service sector is holding up well, also helped to support sterling, analysts said. Elsewhere, the yen continued to firm following overnight reports that the National Association of Manufacturers in the U.S. were complaining that dollar strength against the yen was undermining their ability to compete.