EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined marginally against the USD and closed at 1.2276, as rising borrowing cost in a Spanish bond auction raised concerns that the region’s debt crisis is deepening.
In a bond auction, the Spanish government successfully auctioned 2, 5, and 7 year debt, but yields made new euro era records at 5.20%, 6.46% and 6.70% respectively, and 10 yr bonds yields rose back above 7% after the auction.
On the other hand, France sold €8.96 billion of bonds maturing in 2015, 2016 and 2017, including €4.5 billion new series of five-year debt at a yield of 0.86%.
Adding to the gloom, Fitch rating affirmed Italy’s ‘A-’ ratings with a ‘Negative’ outlook, citing that the nation is struggling to stabilize its strained public finances and get the economy growing.
Meanwhile, the French Finance Minister, Pierre Moscovic stated that some countries in the Euro-zone are not very keen on the idea of euro bonds but added that the monetary union should not give up the idea entirely.
On the economic front, on a seasonally adjusted basis, the Euro-zone current account surplus widened to €10.9 billion in May, from a revised €5.5 billion surplus in April. Separately, Italian industrial orders rose 1.7% (MoM) in May, in line with the market expectation.
Meanwhile, the German parliament yesterday voted approving a bailout plan to help ailing Spanish banks refinance approving up to €100 billion in loans from the European Financial Stability Facility.
Moreover, the Spanish authorities approved the latest round of spending cuts and tax increases to shave €65 billion off the government’s budgets by 2015.
In the Asian session, at GMT0300, the pair is trading at 1.2266, with the EUR trading 0.08% lower from yesterday’s close.
The pair is expected to find support at 1.2222, and a fall through could take it to the next support level of 1.2178. The pair is expected to find its first resistance at 1.2317, and a rise through could take it to the next resistance level of 1.2368.
Trading trends in the pair today are expected to be determined by the release of German producer prices.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.
