Euro Drifts to One Month Low

by Korman Tam

The greenback advanced across the board in the Friday session, rising to a one-month high against the euro at 1.3025 and edging up to 1.4757 versus the sterling. The US equity bourses were up marginally, with the Dow Jones and Nasdaq up by nearly 0.5% by afternoon trading.

The US economic calendar was light today, seeing only the release of the University of Michigan consumer sentiment survey for April. The preliminary April University of Michigan Sentiment survey improved by more than anticipated to 61.9, beating out calls for an improvement to 58.5 from 57.3. The conditions component improved to 66.6, compared with forecasts for an increase to 64.0 from 63.3 previously, while the expectations component increased to 58.9.

Euro Slumps

The euro fell to its lowest level in one-month to 1.3025 against the greenback breaking beneath its recent consolidation. The catalyst of the move lower in the euro was sentiment that the Bank is now divided on whether to further aggressively ease policy over the coming meetings to stimulate the economy. Although Bank President Trichet reiterated the Bank was “very united”, there remains some uncertainty over whether some members want to aggressively slash interest rates below 1.0%. Board member Weber has stressed that he opposes such aggressive easing, while Trichet has hinted at the possibility for another 25-basis point cut to 1%.

EURUSD will find support at 1.30-figure, followed by 1.2970 and 1.2940. Subsequent floors are seen at 1.29, backed by 1.2850 and 1.28. Gains will target 1.3050, followed by 1.3080 and 1.31. Additional ceilings will emerge at 1.3140, backed by 1.3170 and 1.32.

Taken From : Forexnews.com