EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.26% against the USD and closed at 1.3750, after industrial output in the Euro-zone unexpectedly dropped 1.1% in October, the biggest monthly decline since September 2012 confounding predictions of a 0.3% rise, thereby raising concerns that the economy is again struggling to regain momentum. Meanwhile, the consumer price index (CPI) in France held steady and rose 0.8% on an annual basis, as expected, after a 0.7% growth in October. The Italian CPI rose 0.7% on an annual basis in November, marginally above an expected 0.6% rise and following a revised 0.7% increase recorded in the preceding month.
Furthermore, the European Central Bank’s (ECB) monthly report for December indicated that the central bank is very keen on continuing its accommodative monetary policy for a long time, amid downside risks to the region. The report further highlighted that economic risks are tilted to the downside, while risks to its consumer price outlook are broadly balanced. Reiterating the monthly report’s stance was ECB Board member, Benoit Coeure who asserted that the he could not rule out further monetary easing, including cutting interest rates, moving deposit rate into negative territory or providing additional liquidity to the banking sector. Additionally, another Board member, Peter Praet insisted that the central would definitely act decisively again if downside risks materialize.
The US Dollar gained ground despite mixed data released yesterday in the US. According to the US Census Bureau, advance retail sales in the US increased 0.7%, on a monthly basis, in November, the highest level recorded since June and compared to a revised 0.6% rise recorded in the preceding month. Additionally, the US business inventories increased 0.7%, the largest gain in nine months, after rising 0.6% in September. In contrast, the US Department of Labour reported that the initial jobless claims for state employment benefits increased by 68,000 to a seasonally adjusted 368,000 in the week ended 6 December 2013.
In the Asian session, at GMT0400, the pair is trading at 1.3746, with the EUR trading tad lower from yesterday’s close.
The pair is expected to find support at 1.3721, and a fall through could take it to the next support level of 1.3695. The pair is expected to find its first resistance at 1.3788, and a rise through could take it to the next resistance level of 1.3829.
Trading trends in the pair today are expected to be determined by the US producer price inflation figures.
The currency pair is showing convergence with its 20 Hr moving average and is trading below its 50 Hr moving average.
