EURUSD Consolidates Below 1.2600 as Volatility Tails Off
It’s a slows day for European currencies as the Cable and Euro both seem to be settling from Friday’s rally and Monday’s reversal of those gains. There was little news during the European session, and what news there was didn’t move currencies in a notable way. EURUSD remains stuck underneath 1.2600 and above 1.25800, which may be a support from the 23.6% retracement from May’s lows towards March’s highs or the support set by an August 2010 low.
In news, European producer prices fell more than expected during May, raising the possibility for monetary action at Thursday’s European Central Bank meeting. However, this only moved the Euro slightly lower. UK Purchasing Managers’ Index surprised traders with a survey indicating a drop in construction output, and mortgage approvals also dropped in May but were still higher than expected.
In other markets, the US ISM for manufacturing in June indicated a decline in output according to yesterday’s release, which brought a significant drop for the Dollar against the Yen, but not against the Euro. At the end of the Asian session, the RBA kept their cash rate target at 3.50% as expected.
Later today, traders should keep an eye out for US factory orders for June, set to be released at 14:00 GMT. Analysts expect a 0.1% drop.
EURUSD 5-minute: July 3, 2012
--- Written by Benjamin Spier, DailyFX Research
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.