EURUSD Movement
For the 24 hours to 23:00 GMT, EUR rose 0.27% against the USD and closed at 1.3099, boosted by efforts to tackle the debt problems of Greece and Spain, and as the greenback came under pressure from expectations of more bond buying by the Federal Reserve and amid persistent worries over the US fiscal cliff.
Yesterday, Federal Reserve board member, Daniel Tarullo called for broad new liquidity and capital rules for the US operations of large foreign banks, which would align them with that of American banks and protect the financial system.
Greece announced this week better-than-expected terms for its debt buyback, fueling optimism it would continue to receive international aid to avoid a default. Meanwhile, Spain’s formal request for European funds to recapitalize its banks this week also helped boost confidence in the single currency.
In addition, many market participants speculated that the US Federal Reserve would unveil a fresh bond purchase scheme to replace Operation Twist, in which it buys long-term maturities while selling shorter bonds, at its policy meeting next week.
Meanwhile, the European Central Bank policymaker, Ewald Nowotny, stated that almost all the countries in Southern Europe will continue to see their economies contracting in 2013. He further added that France will likely see stagnation while there will be a significant negative growth in the other states. He also expressed concern over the deterioration of the strong political unity between Germany and France.
In economic news, the Euro-zone’s producer price inflation eased to 2.6% in October, from 2.7% in September. In the US, the Institute for Supply Management (ISM) reported that its current business conditions index rose to a reading of 52.5 in November, compared to a reading of 45.9 posted in October.
In the Asian session, at GMT0400, the pair is trading at 1.3116, with the EUR trading 0.13% higher from yesterday’s close.
The pair is expected to find support at 1.3070, and a fall through could take it to the next support level of 1.3024. The pair is expected to find its first resistance at 1.3143, and a rise through could take it to the next resistance level of 1.3171.
Trading trends in the pair today are expected to be determined by the release of the Markit services PMI in France, Germany and the Euro-zone and the retail sales data in the Euro-zone.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.
