EURUSD Movement
On Friday, EUR declined 0.14% against the USD and closed at 1.3696, as the latter advanced following the release of strong housing data from the US economy. Data from the world’s largest economy showed that the US building permits jumped to 1.08 million units, its highest level in nearly six years while housing starts soared 13.2% to an annual pace of 1.07 million units. However, US consumer sentiment unexpectedly deteriorated from April’s nine-month high level to a level of 81.8 in May.
Meanwhile, during his speech in Arkansas, the St. Louis Fed President, James Bullard projected inflation and employment rate in the US economy to accelerate at a “robust” pace in the near future as, according to him, the US Fed is closer to its employment and inflation goals than at any time in five years.
Meanwhile, in the Euro-zone, an ECB Executive Board member, Benoit Coeure stated that the central bank remains very serious about its statements on forward guidance and interest rates. Furthermore, he highlighted his expectations for interest rates in the region to remain at current low level or lower level for an extended period of time even as it poses a risk to the financial market.
On the economic front, Euro-zone’s seasonally adjusted trade surplus widened to €15.2 billion in March, as exports declined 0.5%, compared to a 0.6% drop in imports. Separately, French non-farm payrolls declined in-line with market estimates for the first quarter of 2014 while Italy’s global trade surplus widened in March.
In a noteworthy development, Moody’s rating agency upgraded Ireland’s credit rating for the second time in six months to “Baa1”, two notches higher than its previous rating of “Baa3”, with a “stable outlook.”
In the Asian session, at GMT0300, the pair is trading at 1.3708, with the EUR trading 0.09% higher from Friday’s close. Late Sunday, a German magazine, Der Spiegel reported that ECB’s Peter Praet could recommend the ECB to cut its benchmark interest rate further to a record low 0.15% from current 0.25% at its next policy meeting on 5 June 2014.
The pair is expected to find support at 1.3685, and a fall through could take it to the next support level of 1.3663. The pair is expected to find its first resistance at 1.3729, and a rise through could take it to the next resistance level of 1.3751.
Later today, the Eurostat is scheduled to publish its report on the Euro-zone’s construction output for March.
The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.
