EURUSD Movement
For the 24 hours to 23:00 GMT, the EUR rose 0.21% against the USD and closed at 1.0776, after Germany’s final Markit services PMI exceeded expectations and reached a nearly one and a half year high level of 56.0 in December, compared to a level of 55.6 in the previous month. The preliminary figures had recorded a drop to 55.4, while investors had expected it to ease to a level of 55.4. Additionally, the Eurozone’s final services PMI came in higher than earlier estimated at a level of 54.2 in December, while markets were expecting it to decline to a level of 53.9.
Yesterday the World Bank forecasted the Eurozone economy to expand 1.7% in 2016, up from 1.5% in 2015.
In the US, release of the US Federal Reserve’s December meeting minutes showed that the Fed officials unanimously agreed to raise short-term interest rates, however some board members voiced worries that inflation could get stuck at dangerously low levels. The minutes also revealed that the board saw gradual increase in interest rates over the next year but offered little clarity on the timing of the next or the number of rate hikes in 2016.
In other economic news, US factory orders fell in line with market expectations by 0.2% in November, after registering a revised rise of 1.3% in the prior month. On the other hand, the US final Markit services PMI rose more-than-expected to a level of 54.3 in December, compared to a preliminary reading of 53.7 in the previous month. Further, the nation’s trade deficit narrowed to a nine-month low level of $42.4 billion in November, from a revised trade deficit of $44.6 billion in the previous month. Market expectation was for the nation to register a trade deficit of $44.0 billion.
Separately, the World Bank projected the US economy to expand by 2.7% in 2016, down 0.1 point from its June forecast, and by an unchanged 2.4% in 2017, on the back of improved labour markets and solid personal spending. Additionally, the bank indicated that it expects the world economy to expand by 2.9% in 2016, down from the forecast of 3.3% it made in June.
In the Asian session, at GMT0400, the pair is trading at 1.0817, with the EUR trading 0.38% higher from yesterday’s close.
The pair is expected to find support at 1.0746, and a fall through could take it to the next support level of 1.0675. The pair is expected to find its first resistance at 1.0857, and a rise through could take it to the next resistance level of 1.0898.
Going ahead, market participants will look forward to the Eurozone’s unemployment rate and Germany’s factory orders data, scheduled to be released in a few hours.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.
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