EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.42% against the USD and closed at 1.2452, on growing concerns that high borrowing cost in Spain are closing the door to the country’s access to credit and following weak economic data from the Euro-zone.
The Spanish Treasury Minister, Cristobal Montoro, stated that nation’s high borrowing costs has effectively shut the nation out of the bond market and urged the European Union to help Madrid recapitalize its debt-laden banks.
Adding to the negative sentiment, Euro-zone retail sales fell sharply 2.5% (YoY) in April, against the market expectation of 1.1% fall and compared to a contraction of 0.2% in March. Moreover, the services purchasing manager index (PMI) in the Euro-zone eased to a reading of 46.7 in May, from 46.9 in April. Meanwhile, in Germany, factory orders on a seasonally adjusted basis fell 1.9% in (MoM) in April, compared to a rise of 3.2% in March. Additionally, German services PMI fell to a reading of 51.8 in May. Moreover, French services PMI fell slightly to 45.1 in May, compared to a reading of 45.2 in April.
Additionally, G7 ministers, at an emergency meeting have agreed to cooperate to deal with the troubling situation in the Euro-zone, however produced no major policy announcements.
Meanwhile, the International Monetary Fund Managing Director, Christine Lagarde, stated that the European Central Bank (ECB) had room for another interest rate cut.
In the Asian session, at GMT0300, the pair is trading at 1.2488, with the EUR trading 0.29% higher from yesterday’s close.
The pair is expected to find support at 1.2421, and a fall through could take it to the next support level of 1.2354. The pair is expected to find its first resistance at 1.2544, and a rise through could take it to the next resistance level of 1.2601.
Trading trends in the pair today are expected to be determined by the European Central Bank interest rate decision and the release of Euro-zone gross domestic product and German industrial production.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.
