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Euro Remains Subdued as Consumer Confidence Dips

H.S. Borji
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Euro Remains Subdued as Consumer Confidence Dips

The euro was trading at yearly lows against the US dollar Wednesday, as weak Eurozone consumer confidence data failed to provide relief.

The EURUSD consolidated at 1.3467, little changed from the previous close. The pair bounced from an intraday low of 1.3455, as a light release schedule kept trade volumes light. The EURUSD faces initial support at 1.3432 and resistance at 1.3545. The pair is trading more than 250 pips below the 100-day simple moving average.

The pair has declined nearly half a percent the past five days to set fresh 2014 lows.

In economic data, Eurozone consumer confidence in July unexpectedly declined for a second consecutive month.

The Eurozone consumer confidence indicator fell from -7.5 to -8.4 in July, the European Commission’s flash estimate showed today. Economists forecast no change from the previous month.

The confidence indicator was also down for the broader, 28-nation European Union. The flash estimate of -5.5 was 1.2 points lower than the June figure, according to the European Commission.

The EC will release the final figures along with economic sentiment data on July 30.

The Eurozone calendar picks up Thursday with the release of manufacturing and services PMI for Germany and the broader euro area. The PMI readings are expected to show moderate growth in Eurozone manufacturing and non-manufacturing activity this month.

On Friday the IFO Institute will report on Germany’s business climate, while GfK will release its monthly German consumer confidence indicator.

The United States had no major release items scheduled for Wednesday. On Tuesday upbeat economic figures kept the greenback elevated and sent the EURUSD toward fresh lows.

US consumer prices advanced at an annual rate of 2.1 percent in June, unchanged from the previous month, the Commerce Department reported Tuesday. However, core inflation edged slightly below forecasts, advancing at an annual rate o1.9 percent.

Meanwhile, existing home sales advanced 2.6 percent to an annual rate of 5.04 million in June, as higher inventories and moderating house prices boosted sales, the National Association of Realtors said.

The Commerce Department will release data on new home sales Thursday.

In other trading, the euro was unchanged against the Japanese yen, as the EURJPY held steady at 1.3662. The pair faces initial support at 1.3636 and resistance at 1.3714.

The Japanese government is scheduled to release June consumer inflation figures Thursday.

The euro was unchanged against the Swiss franc, as the EURCHF held steady at 1.2148. The pair likely faces support at 1.2144 and resistance at 1.2157.

The euro edged higher against the British pound, as the EURGBP climbed 0.11 percent to 0.7899. The pair faces initial support at 0.7878 and resistance at 0.7914.

Sterling suffered a fresh setback Wednesday after the minutes of the July Bank of England policy meetings revealed another unanimous decision to keep monetary policy unchanged. Pound bulls were hoping the minutes would bolster rate hike expectations, but the nine-member Monetary Policy Committee made no clear indication it was actively considering raising the bank rate any time soon.

The UK will post June retail sales figures on Thursday and revised second quarter GDP figures on Friday.

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