EURUSD Movement
For the 24 hours to 23:00 GMT on Friday, EUR declined 0.92% against the USD and closed at 1.2163, amid mounting concerns over the European debt crisis.
Spain’s financial crisis deepened following news that Valencia, a heavily indebted region in Spain, asked Madrid for help and as the Spanish government predicted more recession next year.
Moreover, the Spanish Treasury Minister, Cristobal Montoro, stated that the country’s recession would extend into next year, with gross domestic product falling 0.5% in 2013 instead of expanding 0.2% as originally forecast. Intensifying concerns further, the yield on Spanish 10-year bonds rose 0.25 points to 7.22%.
Adding to the bearish sentiment, rating agency Egan Jones lowered Spain’s sovereign rating from ‘CCC+’ to ‘CC+’, and the European Central Bank (ECB) declared Greek debt as ineligible for collateral in it operations.
However, the Euro received some relief, after the Euro-zone Finance Ministers formally backed an agreement to provide funding up to €100 billion to Spain.
Meanwhile, on the economic front, German producer price index climbed 1.6% (YoY) in June, the lowest rate of inflation since May 2010. Market had expected an increase of 1.8% in June. In France, the coincident index rose 0.1% in May, while the leading economic index dropped 0.2% in May.
Over the weekend, Greece Prime Minister, Antonis Samaras stated that the Greece is in a “Great Depression”. Separately, the German Vice Chancellor, Philipp Roesler, reiterated that Greece must adhere to austerity measures in exchange for bailout money.
The European Commission, the European Central Bank and the International Monetary Fund (IMF) would meet tomorrow in Athens to determine the fiscal position of Greece. Meanwhile, the Der Spiegel magazine reported that the IMF would stop paying further rescue aid to Greece, making the country’s insolvency in September more likely.
In the Asian session, at GMT0300, the pair is trading at 1.2113, with the EUR trading 0.41% lower from Friday’s close.
The pair is expected to find support at 1.2052, and a fall through could take it to the next support level of 1.1990. The pair is expected to find its first resistance at 1.2229, and a rise through could take it to the next resistance level of 1.2344.
Trading trends in the pair today are expected to be determined by the release of consumer confidence data in the Euro-zone.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.
