EURUSD Movement
For the 24 hours to 23:00 GMT, EUR rose 0.39% against the USD and closed at 1.2333, following a well-received Italian bond auction.
Investors also bought the Euro amid speculation that the European Central Bank would soon take action to reduce borrowing costs for Spain and Italy.
In a bond auction, Italy sold targeted amount of €8.0 billion ($9.829 billion) of 12-month government bonds at an average yield of at an average yield of 2.767%, compared with 2.697% at the previous auction in July. Separately, Germany sold €3.77 billion ($4.6 billion) worth of the six-month bond at an average yield of -0.0499%, compared with -0.0344% on July 9. The nation received €4.75 billion worth of bids, showing demand was strong despite the negative yield. Additionally, France sold a total of €7.187 billion just close to the maximum amount targeted of €7.2 billion, in 12-week, 23-week and 49-week paper.
However, the Euro pared some of its earlier gains, following news that the new law suit against the legality of the European Stability Mechanism (ESM) was filed in Germany.
Meanwhile, in Germany, Michael Fuchs, a deputy head of Chancellor Angela Merkel’s party, stated that the nation would not hesitate to veto further aid to the Greece if there were any signs that nation was not meeting the conditions of its bailout. In Greece, economy shrank 6.2% in the second quarter of 2012, compared to a contraction of 6.5% in the first quarter.
Separately, German wholesale price index rose 0.3% (MoM) in July, against the expectations for a 0.4% decline. Meanwhile, the French current account deficit widened to €4.9 billion in June, from a revised deficit of €4.0 billion in May.
In the Asian session, at GMT0300, the pair is trading at 1.2346, with the EUR trading 0.11% higher from yesterday’s close.
The pair is expected to find support at 1.2288, and a fall through could take it to the next support level of 1.2229. The pair is expected to find its first resistance at 1.2389, and a rise through could take it to the next resistance level of 1.2431.
Trading trends in the pair today are expected to be determined by the release of German and French gross domestic product (GDP). Additionally, the Euro-zone second quarter GDP data set to release today is expected to decline.
The currency pair is trading above its 20 Hr and 50 Hr moving average.
