EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.42 % against the USD and closed at 1.2883, after the Euro-area’s recession extended to a record sixth straight quarter in the first quarter of 2013 (Q12013).
The economic data indicated that the gross domestic product in all key nations in the Euro-zone expect Germany contracted in 1Q 2013, raising speculation that the European Central Bank (ECB) would not hesitate in announcing negative interest rates in the near future. Separately, consumer price inflation in France eased to 0.8% in (YoY) in April, following a 1.1% growth recorded in the previous month. Market had expected a rise of 0.9%.
Meanwhile, data in the US also recorded negative numbers after a series of encouraging data released recently. Industrial production in the nation dropped 0.5% (MoM) in April, compared to a revised 0.3% increase recorded in March. The New York State manufacturing index also slipped to a reading of -1.43 in May, from a reading of 3.05 recorded in the previous month. However, the NAHB housing market index rose to a reading of 44.0 in May, from a reading of 41.0 recorded in the prior month.
In the Asian session, at GMT0300, the pair is trading at 1.2868, with the EUR trading 0.12% lower from yesterday’s close.
The pair is expected to find support at 1.2826, and a fall through could take it to the next support level of 1.2784. The pair is expected to find its first resistance at 1.2927, and a rise through could take it to the next resistance level of 1.2986.
With the last week’s jobless claims data showing an unexpected improvement in the labour market, it remains to be seen whether the trend has continued, given the influence of labour market data on the Fed’s monetary policy stance. Also, inflation figures from the US and the Euro-zone would remain on traders checklist to gauge the near term movement in the pair.
The currency pair is showing convergence with its 20 Hr moving average and is trading below its 50 Hr moving average.
