EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.39% against the USD and closed at 1.2938, as initial optimism over the Greek debt deal faded amid concerns over US fiscal policy.
The Euro initially firmed on the news that the EU and IMF officials agreed on a proposal for Greece to cut its debt to 124% of gross domestic product by 2020 in exchange for fresh aid payments. However, it pared back gains on concerns that the deal still won’t resolve underlying problems in Greece and elsewhere in Europe.
Meanwhile, the US Dollar saw support on rising concerns that the US policymakers are running out of time to steer the country away from the fiscal cliff, a combination of tax hikes and spending cuts due to take effect at the same time at the end of this year. The dollar also gained as investors lost appetite for risk, after the US Senate Majority Leader, Harry Reid, a Democrat allied with President Barack Obama, stated that he was disappointed over the progress of fiscal reforms talks with his Republican counterparts.
Additionally, the Organisation for Economic Cooperation and Development (OECD), in its latest report, downgraded the outlook for global growth next year to 1.4% from 2.2% expected previously. It stated that the global growth is set for a sharp slowdown and the Euro-zone debt crisis “remains the greatest threat to the world economy at present”.
On the economic front, the consumer confidence index in the US climbed to 73.7 in November, from an upwardly revised 73.1 in October. Separately, the S&P/Case-Shiller 20-City Composite Home Price Index rose 3.0% (YoY) in September, compared to a 2.0% rise in August. However, durable goods orders remained flat, following a revised 9.2% rise in September.
In the Asian session, at GMT0400, the pair is trading at 1.2937, with the EUR trading marginally lower from yesterday’s close.
The pair is expected to find support at 1.2902, and a fall through could take it to the next support level of 1.2867. 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 1.3034.
Trading trends in the pair today are expected to be determined by the release of M3 money supply data in the Euro-zone and the consumer price index in Germany. Meanwhile, the release of US new home sales is also awaited.
The currency pair is trading just below its 20 Hr and 50 Hr moving averages.
