EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.08% against the USD and closed at 1.2278, amid worries over Europe’s fiscal woes and comments from German Chancellor, Angela Merkel casting doubt on whether the “European Project” had a solid future.
Yesterday, German Chancellor, Angela Merkel, stated that she was “optimistic”, but could not be certain that the “European project” would work, in comments that cast doubt on plans for tighter European integration and weighed on the single currency.
Moreover, German Finance Minister, Wolfgang Schaeuble, stated that Spain must commit itself not only to recapitalise its banks but also to restructure them.
Separately, Spanish banks’ bad loans increased to 8.95% of total lending in May. The Bank of Spain reported that bad loans rose to €155.84 billion in May, the highest since April 1994.
In a bond auction, Germany raised € 4.17 billion in two-year treasury notes with an average yield of -0.06%. Additionally, Portugal’s debt management agency, IGCP raised a total €2 billion from the sale of its 12- and 6-month treasury bills against a target of €1.75 billion – €2 billion, as borrowing cost declined.
The International Monetary Fund yesterday stated that Portugal has made progress in fiscal consolidation despite the difficult situation in the Euro area. The country’s recession this year is expected to be a bit milder than originally envisaged, the lender added, forecasting a 3% contraction.
On the economic front, on a seasonally adjusted, construction output in the Euro-zone rose 0.1% (MoM) in May, compared to a revised 3.7% drop in April.
Meanwhile, Federal Reserve in its Beige Book reported that overall economic activity in the US continued to expand at a modest to moderate pace in June and early July.
In the Asian session, at GMT0300, the pair is trading at 1.2294, with the EUR trading 0.13% higher from yesterday’s close.
The pair is expected to find support at 1.2242, and a fall through could take it to the next support level of 1.2189. The pair is expected to find its first resistance at 1.2322, and a rise through could take it to the next resistance level of 1.2349.
Trading trends in the pair today are expected to be determined by the release of Euro-zone current account data and Italian industrial orders data.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.
