EURUSD Movement
For the 24 hours to 23:00 GMT, EUR rose 0.64% against the USD and closed at 1.2146, after the European Central Bank (ECB) Governing Council member, Ewald Nowotny, stated there were arguments for giving Euro-zone permanent rescue fund a banking licence which would allow it to borrow unlimited ECB money, an idea that the central bank has rejected so far.
The Euro also received support after consumer confidence in Italy rose more-than-expected to 86.5 in July, compared to a reading of 85.4 in June.
However, sentiment remained fragile, as investors remained cautious after the yield on Spanish 10-year government bonds remained above the 7.50% level. Separately, Moody’s Investors Service lowered the rating outlook on 17 German banking groups, while rating agency, Egan Jones downgraded Italy to ‘CCC+’ from ‘B+’.
On the economic front, in Germany, the Ifo business climate index declined to 103.3 in July, from a revised reading of 105.2 in June. Additionally, the business expectations index fell to 95.6 in July, while the current assessment index eased to 111.6 in July.
In a bond auction, Germany raised €2.322 billion from the sale of July 2044 bunds with yield falling to a record-low 2.17% from 2.41% paid in the previous sale on April 25. Additionally, it raised €752 million from the sale of April 2023 inflation-linked bonds at yield of -0.39%.
In the Asian session, at GMT0300, the pair is trading at 1.2140, with the EUR trading 0.05% lower from yesterday’s close.
The pair is expected to find support at 1.2072, and a fall through could take it to the next support level of 1.2005. The pair is expected to find its first resistance at 1.2189, and a rise through could take it to the next resistance level of 1.2239.
Trading trends in the pair today are expected to be determined by the release of GfK consumer confidence survey and import price index in Germany.
The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.
