EURUSD Movement
For the 24 hours to 23:00 GMT, EUR rose 0.13% against the USD and closed at 1.2353.
The Euro started the week with gains, after German magazine, Der Spiegel, on Sunday reported that the European Central Bank (ECB) would define an upper limit for borrowing costs in countries such as Spain and Italy to ensure borrowing costs do not rise beyond a pre-determined level.
However gains were capped after the ECB stated that reports that it might set a cap on peripheral Euro-zone bond yields were misleading.
Moreover, Germany’s Bundesbank criticized the ECB’s plan to lower the region’s sovereign yields through bond purchases, thereby highlighting the rift among policy makers over ways to curb the debt crisis.
Separately, a German member of the ECB’s executive board, Joerg Asmussen, stated that Greek exit from the Euro-zone would be “manageable” even if it would be expensive and result in higher unemployment.
Meanwhile in Greece, finance officials held new talks on finalizing €11.5 billion ($14.19 billion) in spending cuts necessary for the country to continue receiving the international rescue loans. Additionally, the officials stated that nation would reimburse maturing bonds held by the ECB, easing concerns over a possible default.
On the economic front, on a seasonally adjusted basis, construction output in the Euro-zone fell 0.5% (MoM) in June, from a revised 0.2% drop in May. In Greece, current account deficit narrowed to €274.3 million in June, from €1.598 billion in the same month a year earlier.
In the Asian session, at GMT0300, the pair is trading at 1.2357, with the EUR trading marginally higher from yesterday’s close, with investors still uncertain over ECB’s future course of action over bond buying program.
The pair is expected to find support at 1.2312, and a fall through could take it to the next support level of 1.2266. The pair is expected to find its first resistance at 1.2386, and a rise through could take it to the next resistance level of 1.2414.
In absence of significant economic indicators, the Euro is expected to take cues from the 12 and 18 months Spanish bond auction in the day ahead.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.
