EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.47% against the USD and closed at 1.2237.
The greenback rose after the Federal Reserve made no changes to interest rates or policy in general, reiterating earlier stances that it would stimulate the economy if recovery further deteriorates.
Meanwhile, the Euro came under pressure after manufacturing Purchasing Managers’ Index (PMI) in the Euro-zone retreated to a reading of 44.0 in July, compared to a reading of 45.1 in June. Additionally, the manufacturing PMI in Germany fell to 43.0 in July, the lowest since June 2009, while in France it fell to a 38-month low of 43.4.
Yesterday, the Bundesbank President, Jens Weidmann stated that the European Central Bank (ECB) should not exceed its mandate and that the German central bank has more influence on ECB policy than many of its Euro-area counterparts.
Germany’s Sueddeutsche Zeitung newspaper reported that European Central Bank (ECB) President, Mario Draghi, would unveil a two-pronged approach today – a concerted action using both the ECB and the future euro rescue fund European Stability Mechanism – to buy bonds from Spain or Italy.
The Spanish Budget Minister, Cristobal Montoro, stated that the government would introduce debt ceilings for the 17 semi-autonomous regions.
In a bond auction, Germany sold €3.35 billion of five-year bonds at an average yield of 0.31% compared with 0.52% at the last auction.
In the Asian session, at GMT0300, the pair is trading at 1.2244, with the EUR trading 0.06% higher from yesterday’s close.
This morning, rating company S&P lowered Cyprus’ long-term credit rating to ‘BB’ from ‘BB+’ and placed it on CreditWatch with negative implications, citing short-term financing pressures. The ratings company affirmed its stable outlook for Germany’s top “AAA” credit rating and stated that its outlook remained stable.
The pair is expected to find support at 1.2196, and a fall through could take it to the next support level of 1.2147. The pair is expected to find its first resistance at 1.2315, and a rise through could take it to the next resistance level of 1.2385.
Trading trends in the pair today are expected to be determined by the release of ECB interest rate decision and ECB President Mario Draghi’s Speech. The Euro is also expected to take cues from the Spanish bond auction in the day ahead.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.
