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EUR/USD: US Dollar weakened on disappointing US GDP figures, Fed decision
On the US economic front, the Gross Domestic Product (GDP) edged down to an annualized rate of 0.1% in the fourth quarter of 2012 (4Q FY2012), reflecting the first drop since the 2Q FY2009 and compared to a 3.1% growth recorded in 3Q FY2012.
Moreover, the Federal Reserve (Fed) maintained its key interest rate in the range of 0.0% to 0.25%. The Federal Open Market Committee (FOMC) indicated that the central bank would continue purchasing $85.0 billion a month in treasury bonds and mortgage-backed securities until it sees a “substantial” improvement in the labour market.
Additionally, the latest bank lending survey by the European Central Bank (ECB) revealed that, more Euro area banks are expected to tighten credit standards for corporates in the first quarter of 2013 (1Q FY2013) compared to the previous quarter. The survey revealed that a net 15% of banks expect to tighten lending standards for businesses in the coming three months, up from 13% in 4Q FY2012.
In the Euro-zone, economic news, economic confidence rose to a reading 89.2 in January, from a revised reading of 87.8 in December. Meanwhile, industrial confidence rose to a reading of -13.9 in January, following a reading of -14.2 recorded in the last month. Moreover, services confidence rose to a reading of -8.8 in January, from a reading of -9.8 recorded in the previous month.
In the Asian session, at GMT0400, the pair is trading at 1.3569, with the EUR trading marginally lower from yesterday’s close.
The pair is expected to find support at 1.3505, and a fall through could take it to the next support level of 1.3440. The pair is expected to find its first resistance at 1.3611, and a rise through could take it to the next resistance level of 1.3652.
In Germany, investors await retail sales, unemployment change and the consumer price index data scheduled for release later today. Meanwhile, personal spending, continuing jobless claims and Chicago’s purchasing managers’ index data are slated for release later today in the US.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.