EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.63% against the USD and closed at 1.3682.
Yesterday, the US Dollar advanced after the US Federal Reserve (Fed), in its last monetary policy meeting for this year, announced that it would reduce the quantum of bond buying per month by $10 billion from January 2014. Specifically, the Federal Open Market Committee (FOMC) would trim agency mortgage-backed securities purchases from $40 billion to $35 billion per month, and the buying pace of longer-term treasury securities would be slowed from $45 billion to $40 billion per month. The central bank assured that it is likely to keep the federal funds rate at near zero for an extended period of time. Meanwhile, in a separate report released by the US Census Bureau, the number of building permits issued last month remained near the highest level since January 2008 and fell 3.1% to a seasonally adjusted 1.01 million from 1.04 million units in the previous month. Analysts had projected a 4.7% decline to 0.99 million units in November. Meanwhile, the US housing starts climbed 22.7% in November, hitting a seasonally adjusted 1.1 million from October’s 0.89 million. Analysts’ expected an increase to 0.95 million.
In the Euro-zone, the EU finance ministers finally sealed an agreement on a new system for dealing with region’s banks ahead of a two-day Brussels summit starting later today. The officials agreed a way to finance the closure of banks which fail, thereby including a €55 billion fund which would be built up over the next decade by levies on banks.
In economic data in the region, the German Ifo business sentiment reported more improvement in confidence among businesses in the Euro zone’s largest economy. Furthermore, Germany’s Ifo business climate index increased to a level of 109.5 in December, a 20-month high, in line with market expectations and following a level of 109.3 reported in the earlier month. Additionally, the Ifo business expectations index in Germany rose to 107.4 in December, from a revised level of 106.4 reported in November. On the contrary, Germany’s Ifo current assessment index dropped to a level of 111.6 in December, following a level of 112.2 reported in the preceding month.
In the Asian session, at GMT0400, the pair is trading at 1.3659, with the EUR trading 0.17% lower from yesterday’s close.
The pair is expected to find support at 1.3601, and a fall through could take it to the next support level of 1.3544. The pair is expected to find its first resistance at 1.3764, and a rise through could take it to the next resistance level of 1.3870.
Later today the European Council meeting starting in Brussels will generate maximum interest. Meanwhile, in the US important releases such as CB leading indicator, existing home sales change and Philadelphia Fed manufacturing survey would be on investors’ radar.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.
