For the 24 hours to 23:00 GMT, the EUR declined 0.37% against the USD and closed at 1.3705, as the latest batch of downbeat Euro-zone economic releases strengthened speculations for additional ECB stimulus measures. Negative sentiment for the Euro-zone’s shared currency was also fuelled after Germany’s Bundesbank changed its monetary stance and stated that it would fully support the ECB if it decides to add extra stimulus measure to the Euro-zone economy at its next policy meeting in June.
In economic releases, the ZEW survey on German economic sentiment fell for a fifth consecutive month to reach its lowest level since January 2013 in May. Likewise, Euro-zone’s ZEW economic sentiment also surprisingly fell to a level of 55.2 in May, from its previous month’s reading of 61.2. However, the ZEW survey on the current economic situation in Germany rose to a score of 62.1 in May, its highest level since July 2011. Additionally, German wholesale price index rose unexpectedly 0.2% (MoM) in April while Italy’s consumer price index rose 0.6% (YoY), in-line with market expectations. Separately, data from France showed that current account deficit widened slightly in March to €1.5 billion, from €1.4 billion in February.
The US Dollar gained ground despite data revealing that the retail sales in the US missed expectations and rose at a slower monthly pace of 0.1% in April.
Meanwhile, the Atlanta Fed President, Dennis Lockhart affirmed that only a drastic change in the US economic condition could compel the Fed to alter the pace of tapering its quantitative easing programme. Separately, the Richmond Fed President, Jeffrey Lacker opined that credit conditions in the world largest economy have improved since the financial crisis but still many challenges persist. Furthermore, he cautioned that the central bank’s ambitious use of balance sheet could put the bank’s independence at risk and as a result he favoured a narrower and a more restrained role for the US Federal Reserve Bank.
In the Asian session, at GMT0300, the pair is trading at 1.3714, with the EUR trading 0.07% higher from yesterday’s close.
The pair is expected to find support at 1.3677, and a fall through could take it to the next support level of 1.3641. The pair is expected to find its first resistance at 1.3761, and a rise through could take it to the next resistance level of 1.3809.
Later today, traders are expected to keep a close tab on the Euro-zone’s industrial production data and consumer inflation data from Germany, France and Spain.
The currency pair is showing convergence with its 20 Hr moving average and is trading below its 50 Hr moving average.