The euro opened the American session at 1.3634 (8:00 am) after trading in a 1.3616 to 1.3660 range in Asia and Europe. The day's high came just five minutes after the value date change yesterday. After that brief spike the Asian market spend the bulk of its session between 1.3641 and 1.3652.
The German IFO survey (business climate 110.4, expected 110.9, current assessment 114.8, expected 115.4, expectations 106.2 expected 106.5) put the euro on the defensive with the united currency falling from 1.3645 at the issue to 1.3617 within 40 minutes and never regaining the pre-release level. German GDP was as expected at 2.3% wda, 2.5% nsa.
The 200 day moving average at 1.3638 had provided support for most of the week and except for a very brief spike to 1.3643 after the April US new home sales at 10:00 am (433,000, expected 425,000, March revised to 407,000 from 384,000) it was resistance today.
After that one breech the euro stayed below 1.3637 for the remainder of the session.
There was little market reaction to ECB executive board member Benoit Coeure's comment that central banks should take currency effects into consideration when planning policy changes and negative interest rates, which are a charge on commercial bank deposits at the ECB, are still an option. Comments like these have been heard many times and from many ECB officials over the past several months.
Afternoon trading was restricted to 1.3625-35. The close at 1.3629, below the 200 day moving average, was moderately bearish mitigated by the proximity to the average and the low volumes traded in the afternoon.
Below today’s close are a series of daily lows from February 13 at 1.3585, 1.3562 on the 12th, 1.3484 on 6th , down to the 2014 low at 1.3477 on February 3rd. Except for the last none are likely to provide substantial support.
Chief Market Strategist
WorldWideMarkets Online Trading