For the 24 hours to 23:00 GMT, the EUR declined 0.11% against the USD and closed at 1.3394.
The US Dollar strengthened against the Euro, after the Federal Reserve in its monthly monetary policy meeting upgraded its outlook on the health of the US economy, taking note of the dropping unemployment rate and hinting more confidence that the inflation was moving towards the central bank’s target. However, the policymakers reiterated its earlier concerns about the slack in the labour market and reaffirmed that the central bank was in no hurry to raise interest rates. As widely expected, the Fed trimmed its bond-buying program by another $10 billion to $25 billion a month and maintained its key benchmark interest rate at 0.25%.
Earlier in the day, the US Dollar nudged higher after official data revealed that the annualised economic growth in the world’s largest economy had expanded 4.0% in the second quarter, following a revised 2.1% slump in the first three months of 2014. Analysts had expected the economy to grow 3% in the period. Other data from the ADP National Employment report indicated that employers in the US added less-than-expected 218,000 jobs in July, as compared to expectations of 230, 000 jobs from 281,000 jobs added in the previous month. Meanwhile, the US personal consumption spending reported a rise in the second quarter.
The Euro lost ground during the day after the annual inflation data from the Euro-zone’s largest economy, Germany slowed down to its lowest level since February 2010, raising questions whether the ECB’s recent measures are having the intended effect on the economy or not. Moreover, apart from the economic sentiment indicator from the Euro-zone, the consumer, industrial and services confidence indicator continued to deteriorate in July. Furthermore, the ECB eased the credit standards of the banks in the Euro-bloc for lending to businesses for the first time since the second quarter of 2007, in order to support recovery in the region.
Yesterday, the ECB Governing Council member Josef Bonnici urged the central bank to “wait and see” the effects of its recent measures implemented in June, before using other tools such as large-scale asset purchases.
In the Asian session, at GMT0300, the pair is trading at 1.3400, with the EUR trading tad higher from yesterday’s close.
The pair is expected to find support at 1.3373, and a fall through could take it to the next support level of 1.3346. The pair is expected to find its first resistance at 1.3421, and a rise through could take it to the next resistance level of 1.3442.
Going forward, investors would pay close attention to the Euro-zone’s inflation numbers and unemployment rate.
The currency pair is trading between its 20 Hr and 50 Hr moving averages.