Euro Declines As Eurozone Factory Activity Slumps, Coronavirus Fears Mount

The euro lost ground against its major counterparts in the European session on Wednesday, as the death toll from Covid-19 surged in the U.S. and data showed that Eurozone manufacturing activity contracted at the fastest pace in more than seven years in March amid virus outbreak.

Final data from IHS Markit showed that the final factory Purchasing Managers' Index fell to 44.5 from 49.2 in February. The reading was also below the flash estimate of 44.8.

The score has remained below 50.0 for fourteen consecutive months and reached its lowest level in 92 months.

Sentiment deteriorated as reports of rising numbers of coronavirus cases deepened the gloom over the likely impact on the world economy.

The U.S. recorded a big daily jump of 26,000 new cases, bringing the total to more than 189,000. The death toll there leaped to over 4,000, with officials predicting the disease could kill between 100,000 and 240,000 Americans.

Data from Eurostat showed that Euro area jobless rate unexpectedly eased to its lowest level since in over a decade in February, just ahead of the announcement of coronavirus pandemic containment measures in several countries in the region.

The jobless rate fell to 7.3 percent, while economists had expected it to remain unchanged at January's 7.4 percent. That was the lowest rate since March 2008, the agency added.

Data from Destatis showed that German retail sales growth accelerated unexpectedly in February as consumers stockpile essentials ahead of containment measures taken by the government to curb the spread of the coronavirus.

Retail turnover advanced 1.2 percent month-on-month in February, following January's 1 percent increase. Economists had forecast the sales growth to ease to 0.1 percent.

The euro fell to a 2-day low of 1.0560 against the franc and a 6-day low of 1.0917 against the greenback, after rising to 1.0605 and 1.1039, respectively in early deals. Should the euro falls further, it is likely to test support around 1.03 against the franc and 1.08 against the greenback.

The single currency hit near a 2-week low of 117.47 against the yen, pulling away from a high of 118.87 set at 12:00 am ET. Next key support for the euro is likely seen around the 114.00 level.

The latest survey from Jibun Bank showed that the manufacturing sector in Japan continued to contract in March, and at a faster rate, with a manufacturing PMI score of 44.8.

That's down from 47.8 in February and it slips further beneath the boom-or-bust line of 50 that separates expansion from contraction.

The euro edged down to 0.8838 against the pound, after climbing to 0.8911 at 2:45 am ET. The euro is likely to challenge support around the 0.86 mark.

Final survey data from IHS Markit showed that the UK manufacturing activity contracted in March due to the outbreak of coronavirus, or covid-19 and subsequent mitigation efforts.

The Chartered Institute of Procurement & Supply factory Purchasing Managers' Index fell to 47.8 in March from 51.7 in February. The flash estimate was 48.0.

The European currency reversed from an early high of 1.5610 against the loonie, 2-day high of 1.8124 against the aussie and a 6-day high 1.8633 against the kiwi, easing back to 1.5520, 1.7982 and 1.8475, respectively. The euro is seen facing support around 1.51 against the loonie, 1.61 against the aussie and 1.72 against the kiwi.

Looking ahead, U.S. ADP private payrolls data for March is scheduled for release at 8:15 am ET.

In the New York session, U.S. ISM manufacturing PMI for March and construction spending for February are set for release.