EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.74% against the USD and closed at 1.2974, a day after ratings agency Moody’s lowered the credit ratings of Catalonia and four other Spanish regions, citing their worsening liquidity positions and predicting that these regions are likely to ask the central government for aid in 2013.
Meanwhile, the Democratic Left and PASOK Socialist parties in Prime Minister, Antonis Samaras’ conservative-led coalition have strongly opposed unpopular proposals from European Union (EU) and International Monetary Fund (IMF) lenders to lower wages, reduce severance payments and scrap automatic wage hikes.
In bond auction, Spanish Treasury sold €967 million worth of three-month government bonds at an average yield of 1.415%, up from 1.203% at a similar auction last month. Spain also sold €2.56 billion of six-month debt at an average yield of 2.023%, down from 2.213% at a similar auction last month.
On the economic front, business confidence index in France declined to a reading of 85.0 in October, from 90.0 in September. Market had expected the index to remain unchanged in October.
In the Asian session, at GMT0300, the pair is trading at 1.2988, with the EUR trading 0.11% higher from yesterday’s close.
The pair is expected to find support at 1.2940, and a fall through could take it to the next support level of 1.2892. The pair is expected to find its first resistance at 1.3048, and a rise through could take it to the next resistance level of 1.3107.
Trading trends in the pair today are expected to be determined by the release of Markit manufacturing and services PMI in Germany, France and the Euro-zone. Investors also eye Germany’s IFO business climate, current assessment and expectations data. Meanwhile in the US, Federal Reserve’s interest rate decision, monetary policy statement and the press conference thereafter are also likely to receive increased market attention.
The currency pair is showing convergence with its 20 Hr moving average and is trading below its 50 Hr moving average.
