On Mondays trade the euro edged higher against the US dollar, but gains seemed capped, as expectations of FED to begin tapering its Quantitative Easing, weighed on market sentiment.
EUR/USD cross climbed to a session high at 1.2861 at 10:37 GMT, after which consolidation followed at 1.2845. Support was likely to be found at March 27th low, 1.2750, while resistance was to be encountered at 1.2875.
The euro was under ongoing pressure after European Central Bank President Mario Draghi said on July 4th, that the bank policymakers will maintain interest rates at current levels for an “extended” period of time, which, actually, could also mean a possible reduction in rates.
Additionally, on Monday it became clear that German trade surplus narrowed in May to 14.1 billion EUR from 17.5 billion EUR in April. April’s figure was revised down from 17.7 billion EUR previously. Experts had projected a surplus of 17.4 billion EUR. Another report said, that industrial production in Germany decreased at the fastest pace in May, by 1.0% on annual basis, mismatching preliminary estimates that the indicator will decline by 0.5%. April’s data was revised down to a 0.9% rise from 1.0% previously.
At the same time, ECB Ewald Nowotny stated on Monday, that the current period of slowed down economic growth in the single currency zone could be experienced for some time more in the future. He added that a clear fragmentation was present among euro zone countries, as a further deterioration in global economy could have a negative impact on the euro region, especially on the weakly developed economies.
Meanwhile, demand for the greenback was bolstered after the Bureau of Labor Statistics in the United States reported on July 5th, that US economy managed to add 195 000 new job positions in June, significantly above the expected number of 165 000, while in May another 195 000 jobs were added. US Unemployment rate remained without changes at 7.6% in the month of June.
During the whole trading Monday the finance ministers of euro zone countries were holding a meeting in Brussels, while European Central Bank President Mario Draghi was expected to testify before the committee on Economic and Monetary Affairs.
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