Euro Falls as Eurozone Trade Balance Deteriorates

The euro is trading lower against major currencies on Friday, following a deterioration in European Union's trade balance. The euro lost 0.257% of its value against the U.S. dollar to trade around $1.4167. The euro's fall was a lot steeper against the Japanese yen as the European currency fell 0.511% to ¥114. The euro was pushed lower by a deterioration in the Eurozone's trade balance. According to Eurostat, the Eurozone trade deficit widened to €4.1 billion in April from €0.7 billion in the same month last year. The April data is a significant deterioration from March, when the Eurozone recorded a trade surplus of €1.6 billion. Trade balance data seems to point to the conclusion that the full recovery of the Eurozone economy is still far away. The euro was not helped by Italy's trade balance, which was announced slightly before the Eurostat report was published. According to Istat, Italy's trade deficit rose to €3.8 billion in April from €1.3 billion in the same month a year ago. Italy is considered to be one of the Eurozone's weaker economies and any signs of further downturn in Italy's economy will add more concern about the Eurozone's long-term outlook. The euro is sliding downwards as the Greek crisis continues. At the moment, the Greek Prime Minister Papandreou is trying to gather a cross-party support for his new austerity measures, which is a precondition for the next round of the IMF/EU loan. Prime Minister Papandreou was forced to ask a multi-party support after a rebellion within his own Socialist party. It is possible that the euro will rally strongly once, and if, the Greek crisis is resolved, but for now the European currency is continuously sinking. The euro failed to find support in some weak data coming from the U.S. economy. In the first quarter of this year, the U.S. trade balance deteriorated as its trade deficit widened 6.3% to $119.3 billion. For the March quarter, trade deficit stood at 3.3% of GDP, up from 3% in the last quarter of 2010. The U.S. trade deficit was pushed higher by a rise in the goods deficit, which increased by $23.2 billion to $182.5 billion. At the same time, the U.S. surplus in services widened by $1.2 billion to $41.7 billion. The U.S. economy has been sending mixed signals recently, however, after the number of people applying for unemployment benefit fell by 16,000 to 414,000 last week. With the Eurozone economy producing mainly bad news, the mixed picture of the U.S. economy seems to be enough for the greenback to move higher against the European currency. Japan's economy had a quiet day today. The East Asian giant is struggling to shake off the negative effects of the earthquake/tsunami disaster that has struck parts of Japan. Its economy is not expected to produce any significant news today and that seems to be enough for traders to push the value of the yen higher against the troubled European currency. Traders who believe the problems in Greece will continue to eat into the value of the European currency will be interested in the Market Vectors Double Short Euro ETN DRR and the ProShares UltraShort Euro ETF EUO. Other traders will hope that the European currency will be able to rise strongly once the Greek crisis is relieved by accepting a new round of austerity cuts. In addition, the German economy, the Eurozone's largest, is growing strongly at the moment and some traders might be relying of the German giant to push other Eurozone economies higher as well. These traders will be more interested in the ProShares Ultra Euro ETF ULE and the WisdomTree Dreyfus Euro Fund EU.