For the 24 hours to 23:00 GMT, EUR rose 0.28% against the USD and closed at 1.2295, amid hopes that the European Central Bank (ECB) would take steps to stem the Euro-zone debt crisis, after the central bank’s head, Mario Draghi, pledged last week to do whatever is necessary to preserve the Euro.
Yesterday, the US Treasury Secretary, Timothy Geithner, stated that the Europe needs be more forceful and creative in fighting its debt crisis to keep it from impairing the region’s economy.
In Greece, Deputy Finance Minister, Christos Staikouras, stated that the nation is “on the brink” with cash reserves at “almost zero”, while it waits for its next installment of aid from international lenders, raising concerns over the country’s financial position.
Meanwhile, the Bank of Spain reported that the investors took out €163.19 billion by end of May, a record amount since such statistics were first compiled in 1990 and compared with aggregate deposits of €14.6 billion in the same period last year.
The Euro-zone economic data continued to paint a dismal picture for a region, as Euro-zone’s unemployment rate stood at 11.2% in June, while jobless rate in Germany came in at 6.8% in July with the number of people unemployed rising by 7,000 in July. Additionally, German retail sales fell 0.1% (MoM) in June, against the market expectations of a 0.5% rise.
In France, consumer spending growth slowed more-than-expected in June, while Spanish retail sales fell 5.2% (YoY) for the same month. Meanwhile, the unemployment rate in Italy surged to 10.8% in June, from a revised rate of 10.6% in May. Market had expected a jobless rate of 10.3%.
Yesterday, Germany’s finance ministry reiterated its view that there is no need to grant a banking license to the Euro-zone’s new bailout fund, citing that such move could enable the fund to buy large amounts of debt issued by troubled Euro-zone economies.
In the Asian session, at GMT0300, the pair is trading at 1.2297, with the EUR trading flat from yesterday’s close.
The pair is expected to find support at 1.2254, and a fall through could take it to the next support level of 1.2211. The pair is expected to find its first resistance at 1.2335, and a rise through could take it to the next resistance level of 1.2373.
Trading trends in the pair today are expected to be determined by the release of Euro-zone Purchasing Manager Index (PMI) manufacturing data. The ECB meeting tomorrow remains a key focal point for the market participants who are looking for detailed policy action to stem rising Spanish and Italian bond yields.
The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.