Investing.com

Investing.com - The dollar dropped against the euro and most other currencies on Wednesday after data revealed the U.S. economy in the first quarter contracted by much more than markets were expecting, posting its worst performance in five years.



In U.S. trading, EUR/USD was up 0.23% at 1.3638, up from a session low of 1.3600 and off a high of 1.3652.



The pair was likely to find support at 1.3574, Monday''s low, and resistance at 1.3677, the high from June 6.



The Commerce Department reported earlier that U.S. gross domestic product contracted at an annual rate of 2.9% in the first quarter of the year, far surpassing consensus forecasts for a decline of 1.7%.



U.S. first-quarter GDP was initially reported to have increased by 0.1%, but was subsequently revised to show a contraction of 1.0%.



The difference between the second and third estimate was the largest since records began in 1976, the Commerce Department added.



A separate report showed that U.S. durable goods orders fell 1.0% in May, while core durable goods orders fell 0.1%. Market expectations had been for an increase of 0.2% and 0.4%, respectively.



The data weakened the dollar by fueling expectations for the Federal Reserve to keep benchmark interest rates on hold at record lows for longer than thought.



The dollar didn''t plummet, however, as rough winter weather likely exacerbated the economy''s poor showing, while recent data has suggested that the economy has rebounded sharply from the first three months of the year.



Meanwhile in Europe, market research group Gfk earlier said that its German consumer climate index rose to a seven-and-a-half year high of 8.9 in June, from 8.6 in May, whose figure was revised up from a previously estimated reading of 8.5. Analysts had expected the index to tick down to 8.5 this month.



Elsewhere, the euro was up against the pound, with EUR/GBP up 0.22% at 0.8029, and up against the yen, with EUR/JPY up 0.02% at 138.75.



On Thursday, the U.S. is to release data on personal income and expenditure, as well as data on inflation linked to personal spending.













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