EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.29% against the USD and closed at 1.2438, following weak economic data from the Euro-zone and amid pessimism about the ability of a European summit to ease the region’s debt crisis.
In the Euro-zone, economic confidence index fell to a reading of 89.9 in June, from 90.5 in May. Additionally, consumer confidence index fell to -19.8 in June from a reading of -19.3 in May, while business climate index retreated to -0.94 in June. Separately, industrial confidence fell to a reading of -12.7 in June, from -11.4 in May. Meanwhile, German unemployment rose by 7,000 in June posting a rate of 6.8%.
Separately, news that yields on 10-year Spanish government bonds briefly moved above 7% weighed on investor appetite for the Euro.
Yesterday, Italian Treasury sold €2.5 billion worth of 5-year government bonds at an average yield of 5.84%, up from 5.66% at a similar auction in May. Additionally, it sold €2.92 billion of 10-year government bonds at an average yield of 6.19%.
Meanwhile, on the first day of summit, European leaders stated that they had agreed in principle on a “compact for growth and jobs” which would mobilize around €120 billion ($149.1 billion) for immediate growth measures.
In the Asian session, at GMT0300, the pair is trading at 1.2609, with the EUR trading 1.37% higher from yesterday’s close, after European leaders agreed late yesterday that Euro-zone banks could be recapitalized without adding to government debt and opened the way for tapping a rescue fund, soothing fears over rising credit strains and bond yields in Italy and Spain.
The pair is expected to find support at 1.2468, and a fall through could take it to the next support level of 1.2327. The pair is expected to find its first resistance at 1.2689, and a rise through could take it to the next resistance level of 1.2769.
Trading trends in the pair today are expected to be determined by the release of German retail sales, French Producer Prices and M3 money supply data in the Euro-zone. Investors also await the outcome of European Union summit later in the day.
The currency pair is trading well above its 20 Hr and 50 Hr moving averages.
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