LONDON (AFX) - The euro trended lower in midday trade led by signs that consumer and business sentiment in the euro zone continues to sour, dealers said.
The euro zone's economic sentiment indicator fell 0.6 points to 102.2 in March from 102.8 in February a year earlier, the European Commission said.
Meanwhile, hopes for an European Central Bank rate cut on April 11 kept the euro afloat although many believe the ECB is already behind the curve.
The sentiment data was slightly negative but the euro has managed to hold up reasonably well, Deborah Reed, economist at Bank of America said.
"The prospects are for euro zone growth forecasts to be downgraded further," she said, adding that the euro is likely to come under renewed pressure.
The ECB's weighted average interest rate at its variable rate main refinancing operation was unchanged from last week as was the marginal rate. Both were at 4.75 pct - reflecting expectations that the ECB will cut the minimum bid rate soon, dealers said.
The yen also staged a minor recovery led by demand from Japanese exporters. Dealers however expect the yen to give up its gains. Sterling was slightly firmer, with expectations running high for a rate cut on Thursday.
While sterling still takes its lead from the euro, the UK economy appears to be relatively strong, with monthly house prices continuing to register gains, Reed said.
The morning's construction sector PMI was also favourable, she added.