EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.51% against the USD and closed at 1.2251, as investors questioned whether the latest agreement by European leaders to aid Spanish banks would resolve nation’s debt problems and as German court delays ruling on Euro-zone fund.
The Euro came under pressure following news that the German constitutional court would take three months to come to a conclusion of ESM ratification adding “considerable uncertainty” among investors about fund.
Meanwhile, the Euro-zone finance ministers agreed to release €30 billion ($37 billion) to Spanish bank by the end of this month through the European Financial Stability Facility. Final approval is expected by July 20.
In Greece, Finance Minister, Yiannis Stournaras said yesterday that his government would have to find another €3 billion in savings “urgently” in the coming weeks, as the European Union has kept the payment of the loan instalment on hold due to long political instability after the elections and has indicated that Greece would not get the money until the new government resumes implementation of the planned reforms.
Moreover, German Chancellor, Angela Merkel, stated the Euro-zone crisis was not as serious for Germany as the 2008-09 financial crises, citing she expects the German economy to grow again this year but at a slower pace.
Adding to the bearish sentiment, industrial production in France dropped 1.9% (MoM) in May, compared to a rise of 1.4% in April. Additionally, French manufacturing production fell 1.0% (MoM) in May, against market expectation for a 0.3% fall. However, industrial production in Italy unexpectedly rose 0.8% (MoM) in May, against expectations for a 0.2% contraction.
In the Asian session, at GMT0300, the pair is trading at 1.2262, with the EUR trading 0.09% higher from yesterday’s close.
The pair is expected to find support at 1.2220, and a fall through could take it to the next support level of 1.2178. The pair is expected to find its first resistance at 1.2319, and a rise through could take it to the next resistance level of 1.2376.
Trading trends in the pair today are expected to be determined by the release of consumer price index in Germany. The Euro is also expected to take cues from 10-year bond auction in Germany.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.
