EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.28% against the USD and closed at 1.2903, as investors feared that Cyprus may not be able to come up with a new bailout plan by next week’s deadline as the European Central Bank (ECB) warned that it would withdraw emergency aid from Cyprus if it fails to come up with a bailout plan by Monday. Moreover, the Standard & Poor’s lowered its long-term sovereign foreign currency credit rating on Cyprus to “CCC” from “CCC+” with a “Negative” outlook, citing acute problems in the nation’s banking sector.
Adding to the pressure, the European countries reported downbeat PMI figures for February. The preliminary manufacturing purchasing managers’ index (PMI) in Germany slipped to a reading of 48.9 in March, while the preliminary services PMI dropped to a reading of 51.6 in March. In France, the preliminary manufacturing PMI stood at a reading of 43.9 in March, while the preliminary services PMI retreated to a reading of 41.9 in March. Also, the Euro-zone’s preliminary manufacturing PMI dropped to reading of 46.6 in March, while the preliminary services PMI dropped to a reading of 46.5 in March.
Separately, the US Dollar remained buoyant as the Philadelphia area manufacturing activity expanded unexpectedly in March, while the leading economic index rose more-than-expected in February. Also, the preliminary manufacturing PMI in the US rose to a reading of 54.9 in March. Moreover, on seasonally adjusted basis, existing home sales in the US rose 0.8% in February to annual rate of 4.98 million units, marking the highest level since November 2009. However, for the week ended 16 March 2013, initial jobless claims in the US increased to 336,000, compared to the previous week’s revised figure of 334,000.
In the Asian session, at GMT0400, the pair is trading at 1.2915, with the EUR trading marginally higher from yesterday’s close.
The pair is expected to find support at 1.2879, and a fall through could take it to the next support level of 1.2843. The pair is expected to find its first resistance at 1.2951, and a rise through could take it to the next resistance level of 1.2987.
Investors eye Germany’s IFO business climate, current assessment and expectations data due later today, which is expected to record a marginal rise for March.
The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.
