EURUSD Movement
For the 24 hours to 23:00 GMT, EUR declined 0.95% against the USD and closed at 1.2852, as investors sought the safety of the greenback a day the after International Monetary Fund lowered its 2012 and 2013 global growth forecasts.
However, Chinese central bank injection of a large dose of liquidity into the banking sector helped offset the negative sentiment generated by the IMF warning.
The Euro again came under pressure, after the European Central Bank President, Mario Draghi drove the traders away from riskier bets by stating that the European economy continues to face challenges. He stated that downside risks to Euro-area economic outlook are mainly related to the tensions in the region’s financial markets. He also indicated that the bank expects weak economic activity in the near term and only a very gradual recovery thereafter.
Separately, the German Chancellor, Angela Merkel, in her first visit to Greece for the first time since 2007, stated that Greece was on a “tough path” and that the coalition government led by Prime Minister, Antonis Samaras still had to push through more key cost-cutting reforms. Moreover, the Greek Prime Minister, Antonis Samaras stated that Merkel’s visit to Greece proves that the country is breaking an international isolation.
On the economic front, trade deficit in France widened to €5.3 billion in August, higher than the expected deficit of €5.0 billion and compared to a revised deficit of €4.1 billion in July.
In the Asian session, at GMT0300, the pair is trading at 1.2848, with the EUR trading 0.04% lower from yesterday’s close.
The pair is expected to find support at 1.2792, and a fall through could take it to the next support level of 1.2736. The pair is expected to find its first resistance at 1.2948, and a rise through could take it to the next resistance level of 1.3047.
Trading trends in the pair today are expected to be determined by the release of Germany’s wholesale price index and industrial output data in Spain and France. Meanwhile, in the US, investors await the release of the Federal Reserve’s Beige Book. Also, later today, the Euro-zone finance ministers would continue to hold talks to discuss ways to firewall and extinguish the debt crisis.
The currency pair is trading below its 20 Hr and 50 Hr moving averages.
