EURUSD Movement
For the 24 hours to 23:00 GMT, EUR rose 0.61% against the USD and closed at 1.3669, after the European Central Bank (ECB) left its key interest rate unchanged. Meanwhile, the ECB Chief, Mario Draghi downplayed deflation risks. He further added that the central bank would take fresh policy action to support the fragile recovery; however he made no mention of any specific additional measures for the near future. Additionally, the ECB lowered its inflation forecast for this year and next, predicting a rate of 1.4% for 2013 and 1.1% in 2014.
Separately, the German Finance Minister, Wolfgang Schaeuble sent across a voice of support to the ECB, stating that the central bank has made progress in its efforts to maintain price stability and pursued a responsible monetary policy.
The ECB decision overshadowed the stronger-than-expected data on US third-quarter growth and weekly jobless claims, which had boosted the greenback for a short period of time. Yesterday, official data from the US revealed that the economy expanded at a 3.6% annualised rate, above the initial estimate of 3.0%, and the strongest since the first quarter of 2012. Moreover, people claiming employment benefits unexpectedly fell 23,000 to 298,000 in the week ended November 30, the lowest level in more than two months, reinforcing hopes that the labour market is improving.
In the Asian session, at GMT0400, the pair is trading at 1.3667, with the EUR trading marginally lower from yesterday’s close.
The pair is expected to find support at 1.3581, and a fall through could take it to the next support level of 1.3494. The pair is expected to find its first resistance at 1.3716, and a rise through could take it to the next resistance level of 1.3764.
The release of the crucial non-farm payroll data would further reveal the outlook for the US labour market and provide direction to the Federal Reserve.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.
