EURUSD Movement
For the 24 hours to 23:00 GMT, EUR rose 0.20% against the USD and closed at 1.3199, after the Euro-area economy confirmed that it exited its longest recession, as initially estimated, during the second quarter, on the back of strong recovery in domestic demand and exports. In a separate report, retail sales data in the Euro-zone, revealed a marginal recovery in consumer spending in July driven by a rebound in food sales. Elsewhere, the services PMI data from Italy, Spain, France, Germany and the Euro-zone confirmed that economic recovery is gaining traction.
The European Central Bank Executive Board member, Joerg Asmussen, yesterday cautioned that the forthcoming stress test, which will be part of a comprehensive assessment of the European banks, will be authorities’ last opportunity to restore confidence in the region’s banking system after the two previous such tests failed to do so.
Meanwhile, the greenback failed to gain traction, after the US trade deficit for July widened. Also, the Beige Book revealed that national economic activity continued to expand at a modest to moderate pace in most US districts.
In the Asian session, at GMT0300, the pair is trading at 1.3191, with the EUR trading marginally lower from yesterday’s close.
The pair is expected to find support at 1.3159, and a fall through could take it to the next support level of 1.3126. The pair is expected to find its first resistance at 1.3221, and a rise through could take it to the next resistance level of 1.3250.
Trading trends in the pair today are expected to be determined by the ECB’s interest rate decision, due later today. Investors are also expected to keep a close eye on German factory orders data, scheduled to release later today.
The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.
