EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.42% against the USD and closed at 1.2937, amid growing uncertainty surrounding Greece’s political situation and deepening financial concerns in Spain.
Sentiments were hit as Greece remained divided on forming a new government, mounting concern that another election could set the stage for the country’s exit from the currency union. Additionally, the German Finance Minister, Wolfgang Schaeuble stated that if Greece decides not to stay in the Euro-zone, we cannot force Greece.
Further denting sentiments, in Spain, government bonds saw renewed pressure, with the 10-year yield rising above the psychologically important 6% threshold yesterday for the first time since April, fueling fears that the debt crisis could worsen. On the other hand, Germany raised €4.032 billion from the sale of its new 0.50% five-year Federal Notes or Bobls against the auction target of €5 billion, with the yield at 0.56%, down from 0.80% paid for securities of similar maturity on April 4.
Meanwhile, the European Union officials agreed to make the scheduled payment to Greece this week, despite opposition from some member states following the Greek election results. The Euro-zone governments stated that they would release €4.2 billion in previously-agreed financing for Greece, but held back €1 billion that will be paid out by June, depending on Greece’s funding needs.
On the economic front, on a seasonally adjusted basis, Germany’s exports rose 0.9% (MoM) in March, after expanding 1.5% in February. Meanwhile, imports climbed 1.2% (MoM) in March, compared to a 3.6% rise in February. Additionally, trade surplus widened to €17.4 billion ($22.6 billion) in March, from €14.9 billion in February. Moreover, the current account surplus increased to €19.8 billion, compared to €11.7 billion in February. At the same time, France’s merchandise trade deficit decreased to €5.7 billion in March, from €6.3 billion in February.
In the Asian session, at GMT0300, the pair is trading at 1.2937, with the EUR trading flat from yesterday’s close.
The pair is expected to find support at 1.2899, and a fall through could take it to the next support level of 1.2862. The pair is expected to find its first resistance at 1.2986, and a rise through could take it to the next resistance level of 1.3036.
The pair is expected to trade on the cues from the release of German wholesale price index and ECB monthly report in the day ahead.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.
