For the 24 hours to 23:00 GMT, the EUR rose 0.07% against the USD and closed at 1.3715.
Yesterday, earlier during the day, the Euro came under pressure after Euro-zone’s industrial production unexpectedly fell 0.1% (YoY) in March, for the first time since August 2013. Separately, data from the Euro-zone’s member nations showed that, the EU normalised consumer price index in France registered a less-than-expected year-on-year rise in April while consumer prices in Germany and Spain rose in-line with market estimates last month.
On Wednesday, the ECB Governing Council member and the Bundesbank President, Jens Weidmann indicated that, even as the German central bank stands ready to support the ECB’s future policy action, QE programme in the Euro-zone economy does not seem to be a suitable policy tool to deal with the problem of low inflation rates in the economy. Furthermore, he also opined that the ECB should not decide to act plainly on the basis of the inflation forecast as it also needs to analyse if the factors driving inflation lower in the economy would persist for a longer time or not.
Separately, an ECB Executive Board member, Yves Mersch highlighted the possibility for the ECB to purchase government bonds from eligible member states on the secondary market while another ECB policymaker, Peter Praet cautioned that the continuous low inflation in the region represents a danger for the economy and the ECB must take appropriate measures to to bring it back to sustainable levels. He further projected interest rate in the Euro-zone economy to fall below zero level into the negative territory if the economy continues to witness low level of inflation for a prolonged period of time. Meanwhile, speaking at a forum in New York, the IMF Chief Economist, Olivier Blanchard revealed that the fund projects 25.0% chances for the Euro-zone economy to slip into deflation by the end of 2015.
In the US, producer prices registered its largest rise in one and a half year in April, pointing to a declining deflation risk as demand improves. Meanwhile, yesterday a new report by Fitch Ratings revealed that going forward, monetary stimulus in the form of low interest rates and fiscal stimulus through government spending would no longer play a big role in the economic growth; instead other factors would become the main drivers for the recovery in the nation, mainly improved consumer confidence as a result of a strengthening housing market and rising equity markets.
In the Asian session, at GMT0300, the pair is trading at 1.3720, with the EUR trading marginally higher from yesterday’s close.
The pair is expected to find support at 1.3703, and a fall through could take it to the next support level of 1.3687. The pair is expected to find its first resistance at 1.3734, and a rise through could take it to the next resistance level of 1.3749.
Market participants keenly await Euro-zone’s consumer inflation and first-quarter GDP report, along with the US consumer price index data and a planned speech by the Fed Chief, Janet Yellen, due later today.
The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.