EURUSD Movement
For the 24 hours to 23:00 GMT on Friday, EUR declined 0.27% against the USD and closed at 1.2927, as the prospect of a recession in Germany and renewed concerns about Italy weighed on trading sentiment towards the Euro.
On Friday, Germany’s central bank warned that the Euro-zone’s biggest economy could slip into recession and Italian Prime Minister, Mario Monti said he intended to resign early.
Further, the EUR came under pressure after Silvio Berlusconi’s party withdrew support for the Italian Prime Minister, Mario Monti’s government in a Senate vote on a key economic reform bill.
Moreover, over the weekend, Italian Prime Minister, Mario Monti stated that he intends to resign, rekindling concern that a change in government would dent the efforts to rein in debt.
According to a Greek government official, Greece is near to reaching its target in a buyback of sovereign debt that will unlock aid from the International Monetary Fund and the European Union.
On the data front, German industrial production declined 2.6% (MoM) in October, after declining 1.3% in the previous month. Separately, trade deficit in France narrowed to €4.685 billion in October from a revised deficit of €4.997 billion in September.
Separately, the Bundesbank lowered Germany’s growth forecast for 2012 and 2013, citing widespread uncertainty and difficult economic situation in parts of the Euro area. Gross domestic product (GDP) in Germany is now expected to grow 0.4% in 2013, slower than 1.6% expansion forecasted in June. The GDP growth is estimated at 0.7% in 2012, from the 1.0% growth forecasted earlier.
In the Asian session, at GMT0400, the pair is trading at 1.2897, with the EUR trading 0.23% lower from Friday’s close, amid prospects of a recession in Germany and political uncertainty in Italy after Prime Minister Mario Monti indicated that he intends to resign early.
The pair is expected to find support at 1.2859, and a fall through could take it to the next support level of 1.2821. The pair is expected to find its first resistance at 1.2953, and a rise through could take it to the next resistance level of 1.3008.
Trading trends in the pair today are expected to be determined by the release of German trade balance and Euro-zone Sentix investor confidence data.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.
