EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.34% against the USD and closed at 1.2897, as investors remain cautious amid uncertainty over whether Spain would request a full scale sovereign bailout.
The Euro came under further pressure after the ratings agency, Standard and Poor’s slashed its 2012-2013 Euro-zone growth forecasts. The rating agency stated that it now expects business activity would likely decline by 0.8% across Euro-zone in 2012, from 0.7% decline previously forecasted in July. For 2013, the ratings agency expects the Euro-zone economy to record no growth, revising the earlier outlook for a slight expansion of 0.3%.
Meanwhile, the German Economy Minister, Philipp Roesler, stated that the purchases of sovereign bonds by the European Central Bank could pose a medium-term risk and that adherence to strict conditionality was important.
Separately, the Greek Finance Minister, Yannis Stournaras, stated the nation would need an additional €13-15 billion to finance a two-year extension to meet its budget targets.
In a bond auction, the Spanish Treasury sold €3.983 billion ($5.15 billion) of three-month and six-month bills. The yield on the three-month paper rose to 1.203% from 0.946% on August 28, while the 6-month Treasury bill sold at a yield of 2.213%, up from 2.026 % on August 28. Separately, Italy raised €3.937 billion from the sale of its zero coupon bonds at 2.53% yield, compared to 3.064% in the previous sale on August 28.
In economic news, the market research group, GfK indicated that the consumer confidence index in Germany is expected to remain unchanged at a reading of 5.9 in October. Business confidence in France remained unchanged at a reading of 90.0 in September, compared to previous month. In Spain, the producer price index (PPI) rose 4.1% (YoY) in August, while consumer confidence index in Italy rose to a reading of 86.2 in September.
In the Asian session, at GMT0300, the pair is trading at 1.2903, with the EUR trading 0.05% higher from yesterday’s close.
The pair is expected to find support at 1.2869, and a fall through could take it to the next support level of 1.2835. The pair is expected to find its first resistance at 1.2954, and a rise through could take it to the next resistance level of 1.3005.
Trading trends in the pair today are expected to be determined by the release of German consumer price index data.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.
