EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.72% against the USD and closed at 1.2737, after Greece called for a new election as political leaders in the nation failed to form a ruling coalition, raising probability of Greece exit (Grexit) from the Euro-zone.
Intially, the Euro received support after reports indicated more-than-expected growth in Euro-zone largest economy, Germany. However, gains were capped after Greek President Karolos Papoulias’ meeting with political leaders in Athens failed to produce a government, deepening speculation that the country would have to leave the currency bloc.
In Germany, on a seasonally adjusted basis, the gross domestic product (GDP) rose 0.5% for first three months of 2012, against the market expectation of 0.1% growth and compared to a 0.2% contraction in the fourth quarter of 2011. Additionally, in France, GDP growth remained flat in first quarter of 2012, in line with market expectations, and compared to downwardly revised 0.1% growth in the previous quarter. Moreover, the ZEW survey – economic sentiment index in Euro-zone dropped to a reading of -2.4 in May, compared to a reading of 13.1 posted in previous month.
Meanwhile, in bond auction, Greek Public Debt Management Agency sold €1.3 billion of 13-week treasury bills, with yield of 4.34%, compared with 4.20% at the previous auction April 17.
Moreover, the European Financial Stability Facility (EFSF) sold an additional €960 million of the outstanding 2% May 2017 bond at an average yield of 1.83%.
Yesterday in Greece, a €436 million 10 year note matured and was reportedly repaid by the Greek government.
In the Asian session, at GMT0300, the pair is trading at 1.2729, with the EUR trading 0.06% lower from yesterday’s close.
The pair is expected to find support at 1.2678, and a fall through could take it to the next support level of 1.2626. The pair is expected to find its first resistance at 1.2825, and a rise through could take it to the next resistance level of 1.2920.
Trading trends in the pair today are expected to be determined by the release of consumer price index and trade data in the Euro-zone.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.
