EURUSD Movement
For the 24 hours to 23:00 GMT, the EUR rose 0.27% against the USD and closed at 1.0610, after minutes of the European Central Bank (ECB) revealed that policymakers expect inflation in the Euro-zone to rise significantly in coming months.
Minutes showed that policymakers were divided in the decision to extend asset purchases in December meeting, as few committee members had not backed an extension of its mass bond buying programme, while others agreed that the inflation outlook and the risks surrounding it warranted for an extension beyond March 2017. Further, it noted that some policymakers also argued for a longer extension, taking the programme into next year. Additionally, some could not support either of the two options that had been proposed, while welcoming the scaling down of purchases.
In other economic news, the Euro-zone’s seasonally adjusted industrial production climbed 1.5% on a monthly basis in November, pointing to an economic spurt in the Euro-bloc. Markets expected for a rise of 0.5%, following a revised gain of 0.1% in the previous month.
The US Dollar paired some of its losses, after better-than-expected US initial jobless claims reinforced optimism over the health of the nation’s labour market.
Data indicated that the number of Americans filing for fresh jobless benefits rose less-than-expected to a level of 247.0K in the week ended 07 January 2017, compared to market expectations of a rise to a level of 255.0K, after recording a revised reading of 237.0K in the prior week. Moreover, the nation’s import price index advanced 1.8% on an annual basis in December, meeting market expectations and rising at its fastest pace since 2012. The import price index had recorded a revised gain of 0.1% in the prior month. Also, the nation’s export price index rose 1.1% YoY in December, following a decline of 0.3% in the previous month. On the other hand, the nation’s budget deficit narrowed less-than-expected to $27.5 billion in December, from a budget deficit of $136.7 billion in the prior month.
Meanwhile, the Philadelphia Fed President, Patrick Harker expressed broad confidence in the US economic fundamentals and stated that three interest rate hikes would be appropriate this year.
In the Asian session, at GMT0400, the pair is trading at 1.0606, with the EUR trading marginally lower against the USD from yesterday’s close.
The pair is expected to find support at 1.0570, and a fall through could take it to the next support level of 1.0534. The pair is expected to find its first resistance at 1.0663, and a rise through could take it to the next resistance level of 1.0720.
Ahead in the day, investors will concentrate on the release of the US flash Michigan consumer confidence for January, advance retail sales for December and business inventories for November.
The currency pair is trading between its 20 Hr and 50 Hr moving averages.
