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Forex: EUR/USD erases losses on European morning

FXstreet.com (Barcelona) - Once the EUR/USD retested the daily highs at 1.3040 area on the release of EMU money supply data, failure at such resistance pulled the market down to the lower area of 1.30, reaching 1.3008, around the opening price.

The ECB said Spanish banks bought €15.8B of government bonds in March, while sovereign bond buying by banks in Italy rose €10.8B in March. Also, deposits rose in Portugal, Spain, Italy and Slovenia, but fell by 3.9% in Cyprus in March. EMU money supply eased in March from 3.4% to 3.0% (3m) and from 3.1% to 2.6% (YoY), below 3.0% consensus. Private loans fell -0.8% as expected, like in February (revised lower, from -0.9%).

The European morning is not over yet but investors may be starting to think about the US GDP and consumer sentiment data to be released at 12:30 GMT. “We expect Q1 advance GDP to expand by an on-consensus 3.0% saar, followed by US Michigan Confidence final April reading to be revised down to 72.0 (mkt 73.5)”, wrote TD Securities analyst Annette Beacher.

“The downside risk persists, as upside rejection shows that upper barriers are intact for now, with near-term studies sliding into negative territory and keeping the downside vulnerable”, wrote Windsor Brokers analyst Slobodan Drvenica, pointing to initial supports at 1.2980/70, ahead of 1.2950, 24 Apr low, below which to expose 200 day MA at 1.2937.

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