EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.35% against the USD and closed at 1.3609, following dovish comments from the ECB. The ECB Chief, Mario Draghi reiterated the bank’s forward guidance that the interest rates in the region would continue to stand at current or lower levels for an extended period of time. He urged that the central bank stands by its earlier promise that it would not hesitate to use any form of unconventional instruments, if required in order to avoid the risk of deflation in the region. He expressed his concerns on the region’s high unemployment rate and cautioned that slack still exists in the economy. Meanwhile, in its interest rate decision yesterday, the ECB left its interest rates unchanged after slashing rates to record lows in June.
The ECB surprised everyone by announcing few changes to its decision-making and communications, wherein fewer policy meetings would be conducted and the publication of meeting minutes starting in January 2015.
The Euro continued to trade on a lower footing after the services activity in the region lost momentum and fell to a reading of 52.8 in June from a reading of 53.2 in the previous month. Germany, France and Spain also reported slowdown in its services activity in the same period. Additionally, the retail sales in the region too painted a grim picture for consumption in the region as it missed forecasts and rose at an annual rate of just 0.7% in May, as compared to a consensus estimate for a 1.2% annual rise.
Yesterday, the US Dollar strengthened after the jobs report released indicated that the recovery in the nation was accelerating. The US Department of Labour reported that the non-farm payrolls in the US added 288K jobs in June, as compared to a revised 224K jobs in the previous month. Moreover, the unemployment rate declined to near six-year low of 6.1% in May, from a rate of 6.3% in the previous month. The trade deficit in the nation narrowed to $ 44.4 billion in May, from a revised deficit of $ 47.0 billion in the previous month. Meanwhile, the final reading for the services activity in the nation recorded its highest in 4-1/2 years and stood at 61.0, citing increasing new business activity and hiring. However, the Institute for Supply Management’s (ISM) non-manufacturing PMI edged back slightly since last month at 56.0.
In the Asian session, at GMT0300, the pair is trading at 1.3609, with the EUR trading flat from yesterday’s close.
The pair is expected to find support at 1.3581, and a fall through could take it to the next support level of 1.3553. The pair is expected to find its first resistance at 1.3651, and a rise through could take it to the next resistance level of 1.3693.
Amid a holiday being observed in the US and lack of major releases in the Euro, later in the day, trading trends in the pair today are expected to be determined by global determinants.
The currency pair is trading below its 20 Hr and 50 Hr moving average.
