EURUSD Movement
For the 24 hours to 23:00 GMT, EUR rose 0.16% against the USD and closed at 1.2730, buoyed by a drop in Italy’s borrowing costs to the lowest level since October 2010 at an auction of three-year government bonds.
Yesterday, Italy’s Treasury sold €3.5 billion worth of three-year government bonds at an average yield of 2.64%, down from 2.86% at a similar auction last month.
Meanwhile, the European Union Commissioner for economic and monetary affairs, Olli Rehn, stated that Spain would not need to rein in spending or raise taxes until at least 2014, despite ongoing debt problems. He indicated that he European Commission would “look at every country case by case” and that it was not a policy shift to allow countries to slide on deficit targets.
On the economic front, industrial production in the Euro-zone fell 2.5% (MoM) in September, compared to a 0.9% rise in August. In France, the harmonized consumer price index (CPI) rose 2.1% (YoY) in October, following a 2.2% rise in September.
Separately, minutes of the US Federal Reserve’s latest meeting indicated that a number of central bank officials see the need to expand its monthly bond purchases next year after the expiration of Operation Twist.
In the Asian session, at GMT0400, the pair is trading at 1.2736, with the EUR trading marginally higher from yesterday’s close.
The pair is expected to find support at 1.2702, and a fall through could take it to the next support level of 1.2668. The pair is expected to find its first resistance at 1.2774, and a rise through could take it to the next resistance level of 1.2812.
Trading trends in the pair today are expected to be determined by the release of the GDP data in France, Germany and the Euro-zone and the CPI in the Euro-zone and the US. Investors also await initial jobless claims data in the US.
The currency pair is trading just above its 20 Hr and 50 Hr moving averages.
