EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 1.03% against the USD and closed at 1.2589, amid rising yields on Italian and Spanish bonds and as investors remain doubtful whether the Greece polls were enough to ensure a positive long-term outlook for the single currency.
The yield on Spanish 10-year bonds surged to a euro-era high of 7.28%, amid pressures over the weak state of its finances as well as banking troubles. Adding to the negative sentiment, yield on Italian 10-year bonds also remained above 6.0%.
Meanwhile, German Chancellor, Angela Merkel, stated that the next Greek government should not be granted additional budget scope amid surging 10-year yields on Spanish bonds.
Separately, German Finance Minister, Wolfgang Schauble, stated that the government saw the Greek election result as a “decision by Greek voters to forge ahead with the implementation of far-reaching economic and fiscal reforms”.
According to an International Monetary Fund (IMF) report, Europe needs to quickly set up concrete and more supportive policies that are “growth-friendly”. The report indicates that the region needs to accomplish a recovery in growth and employment without which an improvement in public finances would not be possible.
On the economic front, the Conference Board leading economic index in France fell 0.1% (MoM) to 113.7 in April, compared to a revised 0.4% rise in March. Additionally, Bundesbank, in its monthly report, stated that Germany’s economic momentum would gain pace in the second half of 2012, however it warned that the advancing debt crisis made the outlook uncertain.
In the Asian session, at GMT0300, the pair is trading at 1.2610, with the EUR trading 0.17% higher from yesterday’s close.
The pair is expected to find support at 1.2537, and a fall through could take it to the next support level of 1.2463. The pair is expected to find its first resistance at 1.2705, and a rise through could take it to the next resistance level of 1.2799.
Trading trends in the pair today are expected to be determined by the release of Euro-zone construction output and ZEW economic sentiment and current situation survey in Germany. Additionally, the outcome of the Spain and Greece auction in the day ahead, would give further direction to the Euro
The currency pair is trading between its 20 Hr and 50 Hr moving averages.
