EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.71% against the USD and closed at 1.3061, as political uncertainty in Italy and impending US government spending cuts reduced investors’ risk appetite. Moreover, adding to the gloom Euro-zone’s consumer price index (CPI) fell 1.0% in January, in line with market expectations, and compared to a 0.4% rise posted in the previous month.
However, the preliminary CPI in Germany rose 1.5% (YoY) in February, missing market expectations. Also, the number of unemployed people in Germany fell by a seasonally adjusted 3,000 in February, less than market expectations. Meanwhile, unemployment rate held steady at 6.9% in February.
Separately, in France, producer price index rose 0.5% (MoM) in January, compared to a 0.4% decline posted in the previous month.
In the US, initial jobless claims declined more-than-expected last week, whereas NAPM Milwaukee manufacturing index rose to a reading of 56.5. Also, the Chicago PMI unexpectedly climbed to a level of 56.8 in February, its highest level since March 2011, as compared to a level of 55.6 recorded in the previous month. Moreover, the Federal Reserve Bank (Fed) of Kansas City reported that the manufacturing activity in the Kansas City region declined sharply to a reading of -10.0 in February, from a level of -2.0 in January.
In a noteworthy development, neither the Democrats’ nor the Republican’s bill to replace the automatic spending cuts could garner enough votes in the Senate yesterday thereby making across-the-board cuts for fiscal 2013 effective from today.
Meanwhile, the President of the Federal Reserve Bank (Fed) of Chicago, Charles Evans, opined that the central back should not scale back the asset purchases program prematurely as this might undermine recovery. He also dismissed fears that the aggressive monetary policy stance adopted by the Fed would lead to asset bubbles.
In the Asian session, at GMT0400, the pair is trading at 1.3074, with the EUR trading 0.10% higher from yesterday’s close.
The pair is expected to find support at 1.3032, and a fall through could take it to the next support level of 1.2990. The pair is expected to find its first resistance at 1.3137, and a rise through could take it to the next resistance level of 1.3200.
In today’s scheduled economic news, investors speculate an improvement in Germany’s retail sales and Markit manufacturing PMI data. Meanwhile, Euro-zone’s Markit manufacturing PMI, unemployment rate and CPI data are also likely to receive increased market attention. Separately, investors would also focus on personal consumption expenditure, Markit and ISM manufacturing PMI and the Reuters/Michigan consumer sentiment index data.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.
