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EUR/USD: Euro heading northwards
Economic data from Germany indicated that the nation’s retail sales declined 1.7% (MoM) in December, compared to a downwardly revised 0.6% increase recorded in the previous month. Market had expected the retail sales to drop 0.1% in December. Additionally, German consumer price index (CPI) dropped 0.5% (MoM) in January, compared to a 0.9% increase recorded in the previous month. Market had expected the index to drop 0.4% in January. Economic data from France was also disappointing. On a monthly basis, French consumer spending came in unchanged at 0%, against the market expectations for a gain of 0.3%. The French producer price index (PPI) dropped 0.3% (MoM) in December, more than the 0.2% estimated. Additionally, Italian producer PPI on a monthly basis fell 0.2% in December.
Yesterday, the greenback came under pressure, following reports that more Americans filed for unemployment benefits last week than anticipated.
For the week ended 26 January 2013, initial jobless claims in the US rose to 368,000, an increase of 38,000, from the previous week’s unrevised figure of 330,000. Additionally, for the week ended 19 January 2013, continuing claims climbed to 3.197 million, compared to the previous week’s revised level of 3.175 million. However, personal income rose 2.6% (MoM) in December, while Chicago business barometer improved to a nine-month high in January.
Separately, Federal Reserve Chairman, Ben Bernanke, signaled that he does not intend to ease up on $85 billion in monthly bond purchases to spur a stalled economy and bring down 7.8% unemployment.
In the Asian session, at GMT0400, the pair is trading at 1.3623, with the EUR trading marginally higher from yesterday’s close.
The pair is expected to find support at 1.3564, and a fall through could take it to the next support level of 1.3506. The pair is expected to find its first resistance at 1.3658, and a rise through could take it to the next resistance level of 1.3694.
Trading trends in the pair today are expected to be determined by the Euro-zone’s consumer price index and unemployment rate data and Germany’s Markit manufacturing PMI data. Meanwhile, in the US the unemployment rate, ISM manufacturing PMI, nonfarm payrolls and the Reuters/Michigan consumer sentiment index are keenly eyed by investors.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.