EURUSD Movement
For the 24 hours to 23:00 GMT on Friday, EUR rose 0.71% against the USD and closed at 1.3463, after the European Central Bank said 278 Euro-zone banks are to repay €137.2 billion in central bank loans next week, indicating that liquidity pressure in the bloc has eased. The Euro was earlier lifted as Germany’s Ifo business climate index rose to a seven-month high reading of 104.2 in January, from a reading of 102.4 in December. Moreover, the current conditions index rose to a reading of 108.0 in January from 107.1 in December. Additionally, the expectations index rose to 100.5 from 98.0 in the previous month.
Separately, the European Central Bank (ECB) President, Mario Draghi reiterated that, the Euro-zone economy is set to start recovering in the second half of 2013, though the positive contagion on financial markets has not yet started reflecting on the wider European economic performance. Addressing the World Economic Forum in Davos, the ECB Chief also noted that, 2013 started with economic conditions showing a marked improvement, and financial markets experiencing a “relative tranquility”.
Meanwhile, in the US, new home sales dropped 7.3% to a seasonally adjusted annual rate of 369,000 in December, compared to a rate of 398,000 recorded in November.
In the Asian session, at GMT0400, the pair is trading at 1.3459, with the EUR trading marginally lower from Friday’s close.
The pair is expected to find support at 1.3381, and a fall through could take it to the next support level of 1.3304. The pair is expected to find its first resistance at 1.3508, and a rise through could take it to the next resistance level of 1.3558.
In economic releases the import price index and retail sales data are due in Germany later today, while M3 money supply data is awaited in the Euro-zone. In the US, pending home sales and durable goods orders are awaited.
The currency pair is showing convergence with its 20 Hr moving average and is trading above its 50 Hr moving average.
