The euro came off its overnight lows but failed to move above a previous resistance/support level. Traders this afternoon will be looking for a spark in US manufacturing data after a quiet European trading session has kept the majors in tight ranges and equities in the red.
The EUR/USD is currently being traded at 1.4115 from an opening day price of 1.4086. Market sentiment continues to go against the euro as future aid to Greece, Portugal, and Ireland will be debated by European Union finance ministers today. Earlier today EU y/y inflation was released in-line with expectations, rising by 2.8%. The report modestly increased traders’ appetite for euros but was not substantial enough to turn market sentiment. A break below the 1.4020 for the EUR/USD could spur further selling to the 50% retracement of the January to May move at 1.3900. EUR/GBP is firmer at 0.8720 from 0.8706 on sterling weakness. Support is found at 0.8670, a level that coincides with the 100-day moving average.
Cable is trading just below its opening day price as Friday’s low of 1.6150 appears to have held as short term support. The GBP/USD continues to decline for the fourth straight session as traders wait for tomorrow’s CPI data. Market players may be hesitant to short sterling ahead of the major data release. A move below the support may find support at the apex of two trend lines at 1.6050.
The yen is stronger versus both the dollar and the euro after stronger than expected machine orders climbed 2.9% on expectations of a contraction of -9.7%. The sharp difference between market forecasts and the data release may be explained by the time the data was collected. As such, the move in the yen may be due to further safe haven buying as portfolio managers take a bit of risk off the board given the downturn in equities.
Equity markets continue to trade in the red on European debt woes. The Nikkei is lower by almost -1.0% while the German DAX is down by -1.34%. The FTSE is off by -0.89%.
Approaching the New York open the Empire State Manufacturing Index is forecasted to decline to 20.7 from 21.7. A worse than expected output may feed into USD selling and a stronger reading would benefit equities and slumping commodity prices.
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