EURUSD Movement
On Friday, EUR rose 0.12% against the USD and closed at 1.3672, after the consumer sentiment in Germany surged to a six-year high in January. The consumer confidence in Germany rose to a level of 7.6 for January, against analysts’ predictions that the index would remain steady at December’s 7.4 number. Moreover, the consumer confidence in the Euro-zone rose to a level of -13.6 in December, higher than market expectation of a level of -15.0 and compared to a reading of -15.4 reported in the previous month.
On Friday, the Standard and Poor’s ratings agency downgraded the region to ‘AA+’ from ‘AAA’, with a ‘Stable’ outlook, citing deterioration of creditworthiness of the EU’s 28 member states, thereby indicating that the woes for the Euro-zone has failed to recede. Furthermore, Fitch Ratings affirmed France’s long-term foreign and local currency issuer default ratings at ‘AA+’.
However, the US Dollar losses were capped, after an official report indicated that the final GDP in the US grew at a 4.1% annualised rate in the third quarter, the highest final reading since the fourth quarter of 2009, beating expectations of 3.6% increase and compared to the 2.5% growth in the Q2 2013. Also, the International Monetary Fund (IMF) raised its outlook for the US economy and forecasted that the nation’s economy would expand at a faster pace next year, given positive economic data and some signs of compromise in Congress.
Meanwhile, the Federal Reserve Bank of Boston President, Eric Rosengren stated that he did not agree with Federal Reserve’s last week’s decision to pull back on its stimulus policies, arguing that the unemployment rate remains too high and inflation too low. He urged that given the present scenario, he does not yet have sufficient confidence in this outlook to risk the removal of any monetary accommodation at this time.
In the Asian session, at GMT0400, the pair is trading at 1.3677, with the EUR trading tad higher from Friday’s close.
The pair is expected to find support at 1.3631, and a fall through could take it to the next support level of 1.3584. The pair is expected to find its first resistance at 1.3717, and a rise through could take it to the next resistance level of 1.3756.
Trading trends in the pair today are expected to be determined by a host of economic data from the US to be released later today, mainly the Chicago Fed national activity index, Reuters/Michigan consumer sentiment index along with the personal income and spending data
The currency pair is showing convergence with its 20 Hr moving average and is trading above its 50 Hr moving average.
