EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.59% against the USD and closed at 1.2300, as risk aversion increased among investors after European Central Bank (ECB) stated that there is a downside risks to the Euro-zone’s economic outlook.
In its monthly bulletin, the ECB widened its contraction expectations for Euro-zone economy from 0.2% to 0.3% in 2012. The ECB further stated that high borrowing costs faced by some Euro-area sovereigns was mainly driven by fears of a collapse of the Euro and must be tackled through fiscal consolidation and structural reforms.
Additionally, the central bank indicated that it may intervene in bond markets in tandem with Europe’s bailout funds if troubled nations commit to improving their economies and fiscal positions.
Adding to the negative tone, unemployment rate in Greece climbed 23.1% in May, from 22.6% in April. Meanwhile, Total trade surplus in Italy widened to £2.5 billion in June, from a £1.0 billion in the previous month.
In the Asian session, at GMT0300, the pair is trading at 1.2296, with the EUR trading marginally lower from yesterday’s close.
The pair is expected to find support at 1.2247, and a fall through could take it to the next support level of 1.2198. The pair is expected to find its first resistance at 1.2365, and a rise through could take it to the next resistance level of 1.2434.
Trading trends in the pair today are expected to be determined by the release of German consumer price index (CPI) which is expected to show a rise of 0.4% (MoM) in July. Investors also await industrial production and manufacturing production data in France.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.
