EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.84% against the USD and closed at 1.2962, after the European Central Bank (ECB) slashed the growth outlook for the 17-nation economy for this year and next.
At a press conference, the ECB President, Mario Draghi, stated that weak activity is expected to extend into next year, reflecting the adverse impact on domestic expenditure of weak consumer and investor sentiment and subdued foreign demand. He further indicated that a gradual recovery should start later in 2013.
The ECB now expects the Euro-zone economy to contract by between 0.4% and 0.6% this year and to shrink by 0.3% to 0.9% in 2013. The ECB expects the Euro-zone economy to return to growth only in 2014, expanding between 0.2% and 2.2%.
Earlier, the ECB left its benchmark interest rate unchanged at 0.75% in December, in line with market expectations. The central bank also maintained its deposit rate at zero and the marginal lending facility rate at 1.50% in December.
On the economic front, the seasonally adjusted Gross Domestic Product (GDP) in the Euro-zone fell 0.1% (QoQ) in the Q3 FY2012, in line with the market expectation and following a similar contraction in the previous quarter. Meanwhile, Germany’s seasonally adjusted factory orders advanced 3.9% (MoM) in October, surpassing the market expectation for a 1.0% rise and compared to a 2.4% fall in the previous month.
In the US, the Labor Department reported that jobless claims fell to 370,000 in the week ended December 1, compared to the previous week’s revised figure of 395,000. Moreover, continuing claims fell to 3.205 million in the week ended November 24, compared to the preceding week’s revised level of 3.305 million.
In the Asian session, at GMT0400, the pair is trading at 1.2969, with the EUR trading marginally higher from yesterday’s close.
The pair is expected to find support at 1.2917, and a fall through could take it to the next support level of 1.2866. The pair is expected to find its first resistance at 1.3054, and a rise through could take it to the next resistance level of 1.3138.
Trading trends in the pair today are expected to be determined by the release of trade balance in France and the industrial production in Germany.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.
