Ahead of inflation and growth data, the euro drops

By @ibtimes on

The European shared currency fell against majors a day ahead of the release of UK's inflation data and Euro Zone's advanced reading for the fourth-quarter of 2010.

The U.S. Dollar index, which tracks the performance of the dollar against six-majors, rose on the daily scale to trade at 78.690, compared with the opening levels of 78.357.

EU finance ministers hold two-day meeting in Brussels to discuss debt issue that forced the euro to rise over the past period against the dollar, offsetting exports, and accordingly, growth in the region.

The euro is currently trading lower against the dollar after rebounding from three-month high where it managed to breach and sustain trading below the support at 1.3505 to currently trade at 1.3450. The pair's opening levels were set at 1.3505 while setting a high of 1.3558 and a low of 1.3444.

Earlier this month, the S&P downgraded Ireland's credit rating by one notch to (A-) warning that the euro-zone credit rating may be subject to a rate cut by April if debt conditions continue unsolved.

The outlook for Ireland was shifted to negative, where S&P said that the outlook reflects the view of the uncertainties surrounding the size of Ireland additional capital needs for its largely state-owned financial sector.

The pound extended its rise against majors, trading at 1.5993, compared with the opening levels of 1.5984 where it managed to reach the highest at 1.6076 and the lowest at 1.5956.

The pair will be affected by the release of UK's services sector performance gauge last week, while investors await inflation data that if forecast to spike at 4.0 percent in January from December's 3.7 percent gain.

The pair failed to breach the support at 1.5967; accordingly, trading will remain limited between the mentioned support and the resistance at 1.6055.

The dollar traded lower against the yen, at 83.41, attempting to re-test the resistance at 83.00. The pair will drop further as the Stochastic Oscillator continue to trade in an overbought areas, therefore, a downside movement could be activated as the U.S. session commence.

The pair's bonded by the support at 83.00 and the resistance at 84.0 where a breach of any levels, would allow another 50 point movement to the pair whether it was to the upside or to the downside.

Note: data was collected at 12:15 GMT.

Join the Discussion