EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.45% against the USD and closed at 1.2481, as renewed worries over high Spanish borrowing costs and the nation’s fragile banking system raised concern that Europe’s debt crisis is spreading.
Yesterday, US based ratings agency, Egan-Jones downgraded Spain’s credit rating down to ‘B’ from ‘BB-’, stating that the nation has a higher-than-average exposure to its banking sector.
Moreover, retail sales in Spain registered the biggest decline in more than a year in April. Further denting sentiment, the yield on Spain’s 10-year bond rose to 6.52%, the highest level since November 2011.
In economic news, the import price index in Germany rose 2.3% (YoY) in April, while the export price index advanced 1.8% in April. Additionally, consumer price index in Germany fell 0.2% (MoM) in May, against the market expectation of 0.1% contraction, and compared to a rise of 0.2% in April.
In a bond auction, Italian Treasury raised the targeted amount of €8.5 billion from the sale of its 6-month bills maturing in November 2012, with yields hitting 2.104%, higher than 1.772% at a similar auction on April 26.
In the Asian session, at GMT0300, the pair is trading at 1.2464, with the EUR trading 0.13% lower from yesterday’s close.
The pair is expected to find support at 1.2423, and a fall through could take it to the next support level of 1.2381. The pair is expected to find its first resistance at 1.2540, and a rise through could take it to the next resistance level of 1.2616.
Trading trends in the pair today are expected to be determined by the release of M3 money supply, consumer confidence and economic confidence data in the Euro-zone.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.
