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EUR/USD Update – EU Lowers Euro-Area Growth Outlook as Debt Crisis Lingers



Good day forex traders and readers.

As we head towards mid week, the US dollar appears to be gaining in strength. The EUR/USD is now bearish and testing the region of 1.3480. Continued bearish pressure will see 1.34 tested next.

With reference to the report from Bloomberg below, the euro area growth forecast has been reduced while the unemployment rate is increased. This probably weakened the demand for the euro currency. Find out more below :



EU Lowers Euro-Area Growth Forecast With Unemployment at Record

The European Union trimmed its forecast for euro-area growth next year and raised its unemployment estimate as the economy struggled to regain momentum after a record-long recession.

Gross domestic product in the 17-nation currency bloc will rise by 1.1 percent in 2014, less than the 1.2 percent forecast in May, the Brussels-based European Commission said today. Unemployment, now at its highest rate since the euro was introduced, will be 12.2 percent in 2014, higher than the 12.1 percent predicted six months ago.

“We are seeing clear signs of an economic turnaround, but growth will pick up only gradually and will translate into jobs only with a lag,” EU Economic and Monetary Affairs Commissioner Olli Rehn told reporters in Brussels. “We must not fall into the trap of complacency. Further decisive action to boost sustainable growth and job creation will continue to be necessary in Europe.”

The gloomier outlook deals a blow to the growing sense of optimism that the euro area is emerging from the sovereign-debt crisis and may make it more difficult for European governments to convince financial markets that they are tackling the turmoil through deficit reduction and structural reforms. While the commission’s gauge of economic confidence is at a two-year high, services and manufacturing output unexpectedly slowed in October and unemployment is at a record 12.2 percent. Euro Rate

The strengthening euro also may drag on the recovery by crimping exports. The common currency is up more than 5 percent against the dollar in the last four months. The euro pared losses after today’s report was released, trading at $1.3504 at 11:53 a.m. in Brussels, down less than 0.1 percent on the day.

Next year’s projected return to growth will come after the euro-area economy contracts an estimated 0.4 percent in 2013, the commission said […]

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