“The euro declined below $1.32 for the first time in six weeks after an industry report showed services and manufacturing in the region shrank at a faster pace in February than economists forecast.
The 17-nation currency fell for a third day versus the yen on speculation the European Central Bank will have to keep borrowing costs lower for longer to help spur a recovery. The Dollar Index rose to a five-month high before the release of U.S. leading indicators and a regional manufacturing gauge that may add to evidence the economy is gathering momentum. The pound slid to a 2 1/2-year low against the dollar.
“The outlook in the euro area remains weak,” said Melinda Burgess, a foreign-exchange strategist at Royal Bank of Scotland Group Plc in London. “ECB policy will have to be looser and this will weigh on the euro.”
The euro fell 0.7 percent to $1.3185 at 7:01 a.m. New York time after dropping to $1.3168, the lowest level since Jan. 10. The common currency dropped 1.5 percent to 122.44 yen. The yen strengthened 0.7 percent to 92.88 per dollar.
RBS forecasts the euro will decline to $1.30 by the end of March and as low as $1.19 over the coming year, Burgess said.
The Dollar Index (DXY), which IntercontinentalExchange Inc. uses to track the greenback versus the currencies of six U.S. trading partners, gained 0.4 percent to 81.375 after rising to 81.508, the highest level since Sept. 5.
