EU current account data combined with the EUR/USD reaching a key technical level led to the euro being sold during Friday’s European trading session.
The euro pulled back from its highest level this week across the board after headline current account numbers for the month of March were above expectations, coming in at -4.7B. Data for the month of February was revised higher to -6.5B from -7.2B. Economists had forecasted the current account to be reported at -5.7B. While the headline value was better than expectations, a troubling sign is the drop-off in net portfolio inflows, falling to 77B from 97.3B. Rising sovereign debt yields for the peripheral nations may have deterred new investors from purchasing higher amounts of European assets.
This week’s rebound in the euro came to a halt and should not come as a surprise given the rise in tensions over the European debt crisis. The selling that occurred today may be an attempt by traders to sell this week’s rally combined with a technical level for euro longs to reduce exposure.
EU current account data combined with the EUR/USD reaching a key technical level led to the euro being sold during Friday’s European trading session. The EUR/USD reached as high as 1.4255 a level that coincides with the 50-day moving average as well as the May 12th high. The pair fell as low as 1.4210 before rebounding to 1.4230. Support for the EUR/USD is found in a range between 1.4020 from the March 28th low and 1.4050 from last week’s low.
The euro was also lower in the crosses with the EUR/GBP and the EUR/CHF moving through short term support levels. Support for the EUR/GBP is located at 0.8690, the bottom of the short term consolidation pattern off of the May lows. EUR/CHF has support at 1.2480. A breach here could take the pair lower to 1.2400.
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Russell Glaser is a Currency Analyst with ForexYard. Russell provides analysis in the FX spot market by employing fundamental research methodologies. In addition to currencies, Russell closely follows the correlation between the Commodities market and the movement of equities. His writings have been published on the ForexYard Trading Blog and associated partner sites. Prior to joining Forexyard, Russell Glaser served as a management consultant in the financial services industry, advising Fortune 100 companies. Russell holds a degree in finance from the Fisher College of Business at The Ohio State University.
