COZfx: Euro trading higher ahead of the ECB decision

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COZforex: For the past trading session, EUR marginally declined against the USD and closed at 1.3585, after mixed Euro-zone service sector data. The service sector activity in Germany rise to a seasonally adjusted 55.7 in November, compared to 54.5 in October, defying expectations to hold steady at 54.5. In addition, the Euro-zone services PMI edged up to 51.2 in November, from 51.6 in October. However, the services activity in France declined to 48.0 in November, down from a reading of 48.0 in October, while the Italy services PMI, too contracted to 47.2 in November, from 50.5 in October.

Meanwhile, the gross domestic product in the Euro-region came in-line with the market estimates, rising 0.1% in the third quarter. Separately, the retail sales declined 0.2% in October on a monthly basis, after a 0.6% decline in September.

Even as the fundamental data continued to highlight the fragile nature of the Euro-zone’s economic outlook, a slight positive sentiment was provided by the ratings agency, Moody’s which raised its rating outlook for Spain to “Stable” from “Negative”, citing signs of real improvement in the economy and government finances.

Yesterday, the US Dollar made marginal gains, after the ADP national employment report indicated that the US private sector created 215,000 jobs in November, surpassing expectations of 173.000 and up from October’s 184,000 jobs. Also there was a sharp rebound in new-home sales, wherein the sale jumped 25.4% to a 444,000 annualized pace, following a 354,000 rate in the previous month. Furthermore, the trade balance stood at a deficit of $40.6 billion in October, an improvement over the deficit of $43 billion in September. The above improved data offset a services-sector growth report by the Institute for Supply Management, wherein the index slowed to a reading of 53.9 in November, after it stood at 55.4 in October. Additionally, investors took in stride the Federal Reserve’s Beige Book report which portrayed a generally good picture of the economy in recent weeks.

In technical analysis, coz forex senior derivatives trader Daniel • Moloney said, EUR/USD is predicted to find support at 1.3550, and a drop through could take it to the next support line of 1.3494. Meanwhile, the pair is predicted to find its first resistance at 1.3638, and a rise through could take it to the next resistance line of 1.3670.

Later today, the European Commercial Bank's monthly monetary policy meeting would attract attention from the Euro-zone to understand the central bank’s future policy stance. In the US, the gross domestic product data would be closely gauged for clues about when the Fed will taper its monetary stimulus programme.

(COZ forex UK)