Euro Falls Below 1.30 on a Suggestion of Further ECB Intervention
The Euro was driven back below the key 1.3000 figure against the US Dollar following ECB’s Visco’s comment that the central bank is ready to intervene again on rates. Visco was speaking at the Bank of Italy’s annual meeting and also said that the ECB will consider all measures to maintain current credit conditions. The comments follow the ECB announcing a 25 basis point cut to the interest rate earlier this month. The speculation of a second rate cut is Euro negative.
Furthermore, the official Eurostat estimate of the Euro-zone annual inflation for May was reported at 1.4% and well below the ECB’s 2.0% rate target, and therefore the released didn’t stop the Euro from slipping further after Visco’s comments. The 1.4% rise in consumer prices since May 2012 was as expected and showed a slight bounce in inflation following the 3-year low set in April at 1.2%.
Also, the Euro-zone unemployment rate was announced today at a record high of 12.2%, which met expectations. Italian unemployment was reported at 12.0% for April, which was higher than expected and set a new 36-year high. Neither employment release had a significant effect on Forex markets.
In other economic releases, German retail sales disappointed expectations in April by declining 0.4% from the previous month. UK mortgage approvals also disappointed expectations at 53.7K for April.
Now that the Euro is trading below 1.3000, the pair may see resistance at that level. EUR/USD may continue to see support around 1.2820.
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EUR/USD 1-Day: May 31, 2013
Chart created by Benjamin Spier using Marketscope 2.0
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