EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.20% against the USD and closed at 1.2695, after Fitch downgraded Greece’s credit rating by one notch, while Moody’s lowered debt ratings of 16 Spanish banks.
Rating agency, Fitch, downgraded Greece’s credit rating to ‘CCC’ from ‘B-‘, citing political uncertainty over its commitment to a crucial EU-IMF bailout and a possible exit from the Euro-zone.
The Euro further came under pressure, following news that Moody’s Investor Service has cut the debt ratings of 16 Spanish banks by one to three notches, citing the reduced creditworthiness of the Spanish government.
Adding to the negative tone, borrowing costs rose in Spain amid growing concern about the state of its economy. Spain’s Treasury sold €1.02 billion of bonds maturing on July 2015, with yield rising to 4.876% from 4.037%. Additionally, it sold €372 million worth of three-year government bonds maturing in January 2015 at an average yield of 4.375%, up from 2.890% at a similar auction in April. The treasury also raised €1.1 billion from April 2016 bonds, at an average yield of 5.106%, up from 3.374%.
Investors were also disappointed, after Spanish gross domestic product fell 0.3% (QoQ) in the first quarter of 2012, unchanged from a preliminary estimate.
In the Asian session, at GMT0300, the pair is trading at 1.2687, with the EUR trading 0.06% lower from yesterday’s close.
The pair is expected to find support at 1.2652, and a fall through could take it to the next support level of 1.2616. The pair is expected to find its first resistance at 1.2736, and a rise through could take it to the next resistance level of 1.2784.
Trading trends in the pair today are expected to be determined by the release of producer price index in Germany.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.
