EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.91% against the USD and closed at 1.2367, as rising bond yields for Italy and Spain and the latest poll results in Greece, added to fears that the Euro-zone’s debt crisis is escalating.
The Euro fell, after yields of 10-year Spanish bonds moved closer to unsustainable 7% level. Sentiments were further dented after Italian 10-year bond yields topped 6% for the first time since January, raising concerns the region is vulnerable to a contagion.
At a bond sale, Italian Treasury raised €2.34 billion through 10-year bonds maturing on September 2022 at yield of 6.03%, up from 5.84% in the previous sale on April 27. Additionally, Treasury sold €3.40 billion of its new June 2017 bond on the 5-year debt at an average yield of 5.66%, up from 4.86% at a similar auction last month.
The Euro also came under pressure, after the latest poll from Greece indicated that leftist Syriza party has taken the lead over the pro-bailout conservatives ahead of a national parliamentary election next month. The poll-survey also found that most Greek voters want to revise the terms of the nation’s financial rescue.
On the economic front, M3 money supply in the Euro-zone rose 2.5% (YoY) in April, slower than the revised 3.1% rise in March. Separately, economic confidence index dropped more-than-expected to 90.6 in May, against the market expectation of drop at 91.9. Meanwhile, the industrial confidence declined to a reading of -11.3 in May, from -9.0 in April. Services confidence fell to -4.9 in May, from -2.4 in April.
Meanwhile, the European Commission (EC) yesterday stated that Euro-zone should move toward a “banking union” to consider euro-bonds and the direct recapitalization of banks from its permanent bailout.
In the Asian session, at GMT0300, the pair is trading at 1.2373, with the EUR trading 0.04% higher from yesterday’s close.
The pair is expected to find support at 1.2327, and a fall through could take it to the next support level of 1.2281. The pair is expected to find its first resistance at 1.2450, and a rise through could take it to the next resistance level of 1.2527.
Trading trends in the pair today are expected to be determined by the release of unemployment change, retail sales data in Germany and Euro-Zone consumer price index estimate.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.
