For the 24 hours to 23:00 GMT, EUR rose 0.35% against the USD and closed at 1.2321, amid optimism that Euro-zone finance ministers meeting to discuss “breakthrough” measures for ailing Spanish bank would calm regions debt crises.
The Euro received support after European Central Bank (ECB) President, Mario Draghi, stated that he would do everything needed to preserve the embattled single currency, citing the “Euro is here to stay”.
In a bond auction, France raised €9.373 billion by selling 3-, 6-, and 12-month bills with the yields on 3- and 6- month maturities turning negative. The yield on the 12-month bills fell to 0.013% from 0.163%. Separately, Germany, sold €3.3 billion bonds of six-month debt with yield falling to a record low of – 0.03%.
Meanwhile, the yield on Spanish 10-year surged to 7.023%, while Italian 10-year rate rose to 6.088%.
In economic news, Sentix research institute reported that Euro-zone investor sentiment index fell to -29.6 in July, from -28.9 in June, the worst level in three years. Meanwhile, in Germany, the current account surplus narrowed to €9.0 billion in May, from €11.2 billion in April. Separately, the trade surplus increased to €15.3 billion in May, following a revised €14.5 billion surplus in April. In France, the business confidence index for the industrial sector declined to 91.0 in June, from 92.0 in May.
In the Asian session, at GMT0300, the pair is trading at 1.2294, with the EUR trading 0.22% lower from yesterday’s close, as meeting of Euro-zone ministers made no apparent progress on activating the bloc’s rescue funds to intervene in bond markets to bring down the spiraling borrowing costs for Spain and Italy.
The euro-zone ministers agreed early today morning to grant Spain an extra year until 2014 to reach its deficit reduction targets in exchange for further budget savings and set the parameters of an aid package for nation’s ailing banks.
The pair is expected to find support at 1.2269, and a fall through could take it to the next support level of 1.2245. The pair is expected to find its first resistance at 1.2321, and a rise through could take it to the next resistance level of 1.2349.
Trading trends in the pair today are expected to be determined by the release of industrial production and manufacturing production data in France.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.