EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.11% against the USD and closed at 1.2491, as the Spanish and Italian government bond auctions resulted in higher borrowing costs and following continued worries over the European Union (EU) summit this week.
In a bond auction, Spainish Treasury auctioned €1.6 billion worth of three-month government bonds at an average yield of 2.36%, up sharply from 0.84% in May. The treasury also sold €1.48 billion of six-month debt at an average yield of 3.23%, up from 1.73% in May. Following the auction, the yield on Spanish 10-year bonds rose to 6.71%.
Separately, Italy sold €2.99 billion worth of two-year bonds at an average yield of 4.71%, the highest since December.
On the economic front, the Gfk consumer confidence index in Germany rose to a reading of 5.8 in July, from 5.7 in June. In France, the consumer confidence index remained unchanged at a reading of 90.0 in June. Separately, in Italy, retail sales fell more-than-expected by 1.6% (MoM) April against the market expectation of 0.6% fall.
Further, the Euro declined after the US credit rating agency, Egan-Jones lowered the rating on Germany to ‘A+’ from ‘AA-’ with a ‘negative’ outlook.
Meanwhile, German Chancellor, Angela Merkel, resisted the idea of common Euro-zone bonds and indicated that there would be no full shared debt liability in Euro-zone.
Adding to the bearish sentiment, Cyprus officials stated that the nation might need €10 billion as a bailout package, over half the size of its economy, reflecting country’s worsening economy.
In the Asian session, at GMT0300, the pair is trading at 1.2506, with the EUR trading 0.12% higher from yesterday’s close.
The pair is expected to find support at 1.2455, and a fall through could take it to the next support level of 1.2404. The pair is expected to find its first resistance at 1.2544, and a rise through could take it to the next resistance level of 1.2582.
Trading trends in the pair today are expected to be determined by the release of consumer price index and import price index in Germany.
The currency pair is trading just above its 20 Hr and 50 Hr moving averages.
