EURUSD Movement
For the 24 hours to 23:00 GMT, the EUR rose 0.35% against the USD and closed at 1.2899, amid news that Germany’s constitutional court had approved the country’s participation in the European new bailout fund, the European Stability Mechanism (ESM). However, it ruled that the German liability to the ESM must not exceed €190 billion without parliament’s approval.
Meanwhile, in Greece, the leaders of the governing coalition remained unable to finalize further spending cuts for the coming two years.
In a bond auction, Germany raised €3.972 billion from the sale of its new 5-year Federal notes at an average yield of 0.61% from 0.31% paid for a security of similar maturity on August 1. It also raised €578 million from the sale of April 2023 inflation-linked bonds at -0.27% yield.
Additionally, the Italian Treasury sold €3.0 billion worth of three-month government bonds and €9.0 billion of 12-month government bonds at an average yield of 0.700% and 1.692%, respectively.
On the economic front, industrial production in the Euro-zone rose 0.6% (MoM) in July, compared to 0.6% drop in June. German annual consumer price inflation rose 2.1% in August, while the harmonized index of consumer prices rose 2.2% in August. Additionally, in France, the harmonized index of consumer prices in France rose 0.7% (MoM) in August. The current account deficit narrowed to €2.5 billion in July, following a revised €4.8 billion deficit recorded in June.
Separately, the Dutch election result showed that the pro-European parties defeated the hard-left Socialists, who oppose austerity and Euro-zone bailouts.
In the Asian session, at GMT0300, the pair is trading at 1.2916 with the EUR trading 0.13% higher from yesterday’s close.
The pair is expected to find support at 1.2842, and a fall through could take it to the next support level of 1.2769. The pair is expected to find its first resistance at 1.2963, and a rise through could take it to the next resistance level of 1.3011.
The pair is expected to take cues from the release of ECB monthly report and consumer price index data in Italy.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.
