EURUSD Movement
For the 24 hours to 23:00 GMT on Friday, EUR declined 0.09% against the USD and closed at 1.2919, amid ongoing concerns over political turmoil in Greece and a potential Greek exit from the Euro-zone.
Further, Euro came under pressure after rating agency, Fitch warned that it would place the ratings of all Euro-zone members on review pending possible downgrades, if Greece was to exit the euro zone as a result of its current crisis.
Over the weekend, Greek political leaders could not reach an agreement on government formation despite an appeal by the Greek President Karolos Papoulias to form a coalition government to avert a repeat election.
In economic news, on an annual basis, the consumer price inflation in Germany rose 2.1% in April, faster than 2.0% initially estimated. Meanwhile, the harmonized index of consumer prices (HICP) increased 2.2% (YoY) in April, in line with the preliminary estimates.
Separately, the European Commission indicated that the European Union economy is in a “mild recession,” with a recovery “forecast to set in slowly from the second half of the year.” Additionally, it expects Euro-zone gross domestic product (GDP) to contract by 0.3% in 2012, rebounding to grow 1.0% in 2013. Unemployment is expected to remain high at 11% in the Euro-zone over the forecast period.
Meanwhile, in a bond auction, Italy sold €7 billion of 12-month Treasury bills at an average yield of 2.34%, down from 2.84% in mid-April.
In the Asian session, at GMT0300, the pair is trading at 1.2884, with the EUR trading 0.27% lower from Friday’s close.
The Greek President Karolos Papoulias is set to continue discussions with political party leaders today on forming a national unity government.
The pair is expected to find support at 1.2857, and a fall through could take it to the next support level of 1.2829. The pair is expected to find its first resistance at 1.2935, and a rise through could take it to the next resistance level of 1.2985.
Trading trends in the pair today are expected to be determined by the release of industrial production in Euro-zone.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.
