The Euro Continued to decline against the USD making new 4 yr low touching 1.2113. Though there were no much movement on Bank holiday in the U.K. and Memorial Day holiday in the U.S on Monday, however on Tuesday the EUR was quite volatile. On Tuesday the EUR touched the low of 1.2113 and recovered again to 1.2352 and now is currently trading at 1.2223. Last week ECB President Trichet called the euro a “credible currency” and said it is keeping value in “remarkable fashion”. Data released in the euro zone on Monday saw the Europe’s May business climate indicator improve to 0.34 from the prior reading of 0.28 while May industrial confidence improved to -6. May consumer confidence was unchanged at -18 and May economic confidence dropped to 98.4. May services confidence fell to +3 from +6 and the May consumer price inflation estimate was up 1.6%. In the US news, the ISM Manufacturing Index grew at a faster pace at 59.7 from the expected figure of 59.3 but lower than the April figure of 60.4. The decline can be attributed from the current decline from the stalled European growth and slowdown in Chinese economy.From the technical view, the trend line (in red) is much steeper which shows the current short term view is bearish. There has been three declining movements and the euro mode being more bearish fundamentally there could be further declines seen in the days ahead. In the coming week, the ISM non-manufacturing data for the US and retail sales data for the EUR can be important data which can determine the volatility in the highly traded pair.
Mohammed Rabbani
Mohammed Rabbani
