The USD continues its rise against the EUR, in line with our expectations, , as investors evaluated international growth prospects with the U.S. and European central banks unlikely to raise interest rates soon.

Factories in the euro zone had their worst month for almost six years in March and forward looking indicators pointed to gloomy times ahead, a survey found, grim reading for European Central Bank policymakers.

Manufacturing PMI declined for an eighth month, coming in at 47.5 from February's 49.3, just below a flash estimate and its lowest reading since April 2013.

An index measuring output change, which feeds into a composite PMI due on Wednesday - seen as a good gauge of economic health - sank to 47.2 from 49.4, its lowest since April 2013 and the second straight month it has come in below the 50 level dividing growth from contraction.

The disappointing results come after the ECB changed its outlook last month. It pushed back the timing of an interest rate rise until 2020 at the earliest and said it would offer banks a new round of cheap loans to help revive the economy.

Data on Tuesday, however, showed that new orders for key U.S.-made capital goods unexpectedly fell in February and shipments were unchanged, while data for January was revised slightly higher.

Our economic cycle clock suggest the U.S. economy entered the recession phase in recent months.

EUR/USD has registered multiple daily closes below the 1.1241 Fibonacci level, a 76.4% retrace of the 1.1177 to 1.1448 rise. That has made the chance of a breakdown below the recent 1.1177 2019 low more likely. We remain short.

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