EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.51% against the USD and closed at 1.2829, as final round of talks between Greece’s President, Karolos Papoulias, and country’s political leader to avert a new election ended without any progress and reinforced fears that the country was firmly on the path to bankruptcy and an exit from the Euro-zone.
Adding to the negative sentiment, Moody’s Investors Service has warned that Spanish banks would remain vulnerable to rising loan delinquencies and cut the credit rating of 26 Italian banks.
Meanwhile, Luxembourg Prime Minister, Jean-Claude Juncker dismissed talk of Greece leaving the Euro-zone as “propaganda and nonsense”, but stated that the country has to respect the terms of the rescue programme agreed with the European Union and the International Monetary Fund.
In economic news, industrial production in the Euro-zone retreated 0.3% (MoM) in March, against market forecast of a 0.4% rise and compared to a revised 0.8% rise in February. Additionally, in France, the current account deficit narrowed to €4.1 billion in March, from a revised deficit of €5.3 billion in February. Moreover, the wholesale price index in Germany rose 0.5% (MoM) in April, compared to a 0.9% rise in March. Meanwhile, on an annual basis, wholesale price index advanced 2.4% in April from 2.2% in March.
In bond auction, Spain sold €2.9 billion in short-term debt, amid strong demand but with higher yields. Meanwhile, Italy raised a total of €5.25 billion, with its three-year benchmark at an average 3.91% yield, the highest since January.
Separately, Bank of France Governor, Christian Noyer stated that French banks have significantly strengthened their capital in 2011 and he is confident about the strength of the country’s financial sector. He added that all French banks have core tier one capital ratios above 9.0%, putting them on track to meet targets set at a European level.
In the Asian session, at GMT0300, the pair is trading at 1.2827, with the EUR trading marginally lower from yesterday’s close.
The pair is expected to find support at 1.2795, and a fall through could take it to the next support level of 1.2763. The pair is expected to find its first resistance at 1.2878, and a rise through could take it to the next resistance level of 1.2929.
Trading trends in the pair today are expected to be determined by the release of gross domestic product and economic sentiment in Germany and Euro-zone.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.
