The dollar struggled against the euro, falling to a new all-time low just shy of the psychologically key 1.60-level at 1.5982. Despite jawboning from a Eurozone official, the greenback came under renewed pressure following the release of a sharply weaker than expected Philadelphia Fed manufacturing index.

The reports from the US largely reaffirmed the gloomy outlook looming over the economy. Weekly jobless claims edged higher to 372k, versus 357k the prior week. The March leading indicators index reversed a 0.3% decline in February, improving to 0.1%. The key highlight though, was a disappointing Philadelphia Fed manufacturing survey, which deteriorated by more than anticipated at minus 24.9 versus calls for an improvement to minus 15 from minus 17.4 in February – its lowest level since February 2001. The employment index also worsened, falling to minus 11.1 from minus 4.7, levels not seen since 2003.

Fed speakers offered a gloomy assessment of the economy, with San Francisco Fed President Yellen said the outlook was unusually uncertain and "growth has slowed to a crawl at best". Further, Yellen said she could not rule out the possibility of a recession. Philadelphia Fed President Plosser echoed a similar sentiment, saying that while the economy may not be in recession, it certainly "feels pretty bad". Meanwhile, Fed Governor Mishkin said that the FOMC still has room to lower the Fed Funds rate as needed.

Euro Climbs Shy of 1.60

The euro rallied to a new all-time high, albeit just missing the psychologically key 1.60-level. Luxembourg Finance Minister Juncker tried to talk down the euro, saying the recent appreciation was undesirable. Given the current levels in the pair, further jawboning from Eurozone officials is seen attempting to cap the euro's gains near the 1.60-mark.

The remaining data from the Eurozone this week will see Germany's March producer prices, which are forecasted to ease to 0.5% from 0.7% a month earlier and edge up slightly to 4.0% from 3.8% in the previous year.