EURUSD Movement
For the 24 hours to 23:00 GMT, the EUR ended the day flat against the USD and closed at 1.3715, giving back its initial losses, triggered by downbeat Euro-zone GDP data.
Data showed that the annualized preliminary Euro-zone’s first quarter GDP rose 0.9%, failing to match analysts’ call for a rise of 1.1%, while the French economy unexpectedly stalled and economic growth in Italy and Netherlands’ shrank but Germany registered an upbeat growth in the first quarter. Additionally, another report confirmed that consumer inflation rate in the Euro-zone economy rose to 0.7%, in annual terms, in April, from previous month’s level of 0.5%. Meanwhile, the ECB, in its monthly report, slashed its annual inflation-forecast on the Euro-zone economy and reiterated its willingness to deploy unconventional monetary policy measures to spur growth. Separately, the ECB Vice President, Vitor Constancio indicated that the central bank does not see distinct signs of deflation in the Euro-zone economy at the moment while its stands ready to act swiftly from preventing the economy from falling into protracted period of low inflation. Likewise, another ECB policymaker, Yves Mersch emphasized that the central bank would create appropriate conditions in order to deal with low inflation in the economy and to contain a stronger Euro.
In a noteworthy event, the IMF opined that French President, Francois Hollande’s goals on fiscal targets seem very challenging at the moment and in order to achieve the target his nation would now have to grow at a pace of 0.5% in each quarter to meet the official forecast of 1.0% growth for 2014.
Meanwhile, in the US, the Fed Chief, Janet Yellen, praised small businesses for its massive contribution in bolstering the US economic growth but, at the same time, she also pointed out that the world’s largest economy would still have further to go in order to achieve a healthy economy.
On the economic front, US annual consumer inflation rate rose at the fastest pace in 10 months to 2.0% in April while weekly jobless claims dropped by 24,000 to 297,000, the lowest reading since May 2007. However, industrial production and the NAHB housing market index in the US unexpectedly fell while the NY Empire State manufacturing index and the Philadelphia Fed manufacturing survey came in better than market expectations for May and April, respectively.
In the Asian session, at GMT0300, the pair is trading at 1.3717, with the EUR trading a tad higher from yesterday’s close.
The pair is expected to find support at 1.3666, and a fall through could take it to the next support level of 1.3614. The pair is expected to find its first resistance at 1.3751, and a rise through could take it to the next resistance level of 1.3784.
Later today, traders would eye Euro-zone’s trade balance report, along with the US housing and consumer sentiment data for further cues in the currency pair.
The currency pair is trading just above its 20 Hr moving average and is showing convergence with its 50 Hr moving average.
