EURUSD recovers during the week

Euro has made a strong recovery this week from the low of 1.3639 against the US Dollar. Euro has been struggling for months now due the Greece debt tribulations but Euro Zone countries agreed to assist Greece. The Euros recovery can be attributed to the French Industrial Production data which gained 1.6% from the previous low of -0.2% which is a major contributor to the Euro Zone. However, Germany’s, Trade balance was forecasted at 16.4bn Euros versus published 8.7bn Euros from the previous of 16.6bn Euros, which could be pulling down the EUR against the USD. The statement of the Fed Chairman Mr.Ben Bernanke to keep the federal fund rate low near zero for “extended period” didn’t lure the markets and investors. On the other hand, US Trade Deficit came down to $37.9B from the previous of $39.9bn. This6.6% decline could be a good signal for the USD in the near term. The Core Retails Sales data for the US was better than expected which was a 0.3% increase, showing indications of economy picking up. European Central bank president Mr. Jean Claude Trichet has positioned confidence on the rating agencies that they would not cut the Greece’s credit rating and has faith on Greece government measures to tackle the issue. However the German ZEW Economic Sentiment index expected was 43.5% which dropped to 44.5% for the month from the previous figure of 45.1% shows the Euro Zone continues to struggle in front of the US positive recovery measures.

Greece is yet to come out with the clear roadmap on the austerity measures to tackle with the budget gaps it is suffering. Investors should watch out for US Producers Price Index, Unemployment Claims data and the EUR Current Accounts data for the week which could have serious impact on the traded pair. From the technical perspective, there is at a very crucial level at 1.3791. The near term resistance for the Euro could be placed at 1.3849. The Support stands at 1.3643.

Mohammed Rabbani