The euro rose to session highs against the widely retreating US dollar on Tuesday, as market players awaited the testimony by Ben Bernanke in front of the Congress and following German Chancellor Angela Merkels comments earlier today.
EUR/USD hit a session high at 1.3129 at 11:22 GMT, the highest point since July 11th, after which consolidation followed at 1.3120. Support was likely to be found at July 15th low, 1.2992, while resistance was to be met at July 11th high, 1.3205.
The euro rose suddenly after earlier on Tuesday German Chancellor Merkel said that Germany was doing everything possible in order to achieve stability in the single currency. She stated again that a stable euro zone could be favorable to Germany and Europe.
Additionally, it became clear that the Zentrum für Europäische Wirtschaftsforschung (ZEW) Economic Sentiment index in Germany decreased in July, compared to June, by 2.2 to 36.3, below the expected value of 40.0. ZEW experts did not change their overall outlook, currently positive, because of their confidence in Germanys economic resilience, despite the latest weak data, regarding trade balance and industrial output in the country. ZEW Current Situation indicator for Germany showed a slight improvement in July by 2.0 to 10.6, compared to June, surpassing the expected value of 9.0.
Euro zones ZEW Economic Sentiment index rose by 2.2 to reach 32.8 during July, outstripping preliminary estimates of a reading of 31.8, while ZEW Current Situation indicator improved by 4.8 to -74.7 in July in comparison with June.
Additionally, the Final Harmonized Index of Consumer Prices (HICP) in the Euro region remained stable in June at 1.6%, unchanged from May and in consonance with expectations. Monthly performance of the index showed an increase by 0.1% in June in line with estimates, as that was the same rate of increase a month ago.
Meanwhile, FED Chairman Ben Bernanke is expected to deliver his semi-annual monetary-policy testimony on July 17-18th. He said in June that the central bank may begin to taper its 85 billion USD in monthly asset purchases by this year’s end and exit the stimulus program in mind-2014, if US economic growth meets policymakers’ objectives. On Monday the Department of Commerce said that retail sales in the United States rose by 0.4% to 422.79 billion USD in June, below the expected 0.7% increase, while during May sales were revised down to a 0.5% rise from 0.6% previously. This data strengthened concerns of a possible slow down in economy’s momentum. At the same time, another report stated that the Empire State manufacturing index in the United States rose to a five-month high of 9.46 during July from 7.84 in June.
Elsewhere, the euro was higher against the British pound, with EUR/GBP cross advancing 0.48% to 0.8691.
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