On Friday, the European currency turned out to be under a slight pressure of U.S. dollar. The pair\'s morning fall from 1.4023 again to 1.3885 was mostly due to the «G8» Summit and mixed exchange market alongside with down-going oil prices. After non-recurrent lowering the pair succeeded to return to 1.3955, bouncing back the most part of losses. The week closed at 1.3935, which is not good and not bad for Euro. Summing up, the greenback gained 86 points versus the single currency. The trading volatility rate amounted to 151 points.
On Friday, the «G8» Summit came to its end, so worth saying some words about essential events, able to impact the market in future. Above all, the leaders agreed to refrain from «competitive devaluations of their national currencies». On one hand, it is a good decision, as these measures will help to slow the inflation and jobless rate upticks. On the other hand, the commoditiy competitiveness will decrease significantly, thereafter — export then the trade balance will put pressure on the economy.
Also, during the Summit appeared more concerns about the IMFspecial loan rights, which finally led to that in a long term prospective the other countries have to think over a single financial instrument for operating.
The European currency slump was also influenced by the stock market, as the major European indices opened on the downside, easing the investors\' confidence. Apart from this, Euro lost some positions due to the announcements about that the IMF consideres an aid package for at least 10 East Europe states, that in its turn can result to losses of the European markets which currently go through a bad stretch.
The Eurozone fundamental data were not considered by the palyers as unprejudiced. The Germany wholesale price index showed growth by 0.90%, better than the experts\' estimate of 0.10%. The industral production of France and Italy also came in the «green zone» rising by 2.6% and 0.00%, respectively.
The 16-nation currency recover in the second part of the trades was mostly due to the US. microeconomic findings. The trade balance indicated a decline by -26.00 bln. Euro coming in better than forecasts of -30.0 bln. Euro negative growth. Besides, the import price index increased by 3.20.%, compared to the last period — by 1.40%. The only Michigan sentiment index showed a drop to 64.60, despite the tickup expectations of 71.10.
The technical market pattern remains complicated for a mid term outlook. The sidewards channel 1.3885–1.3995 is been broken down all the time, but there are no technical outbreaks. Widening formation takes place and it is still in force. There is a probability that in future its upper or bottom line will take a trend direction. If today the pair doesn\'t close below the 39 big figure, then it will be reasonable to look for further European currency recapture.
The support levels stood at: 1.3885, 1.3832, 1.3785
The resistance levels: 1.3978, 1.3995, 1.4052.
The Bollinger bands are signaling the liquidity rate lowering in the market, so a moderate channel movement is possible.
Important fundamental reports are not expected today. By the mid day we will hear Triche\'s speech (the Head of ECB), after that is scheduled the monthly report on the U.S. budget, which is to tick down to -65.50 bln.dollars, according to the forecasts.
Lastly. On Friday, The Finance Department of the USA has started to «clean up» the bank balances from the toxic assets, their volume reaches 2 trln.dollars. There were chosen a range of certain investment funds, which will be responsible for purchase and sale of these assets.
Concerning the «GM», the bankruptcy process will be completed soon. According to the reorganisation plan, the governmnet obtains 60% share in a new established company, Automobile Manufacturers\' Association - 17,5%, Canada\'s government and the canadian province Ontario — 11,7%.
Today i recommend to buy the pair at a 1-hour timeframe closing above 1.3940 with a target – T/P 1.3978 and S/L 1.3911.
Sell the the pair at a 1-hour timeframe closing below 1.3880 with a target – T/P 1.3835 and S/L 1.3920
Best regards,
Analyst: M.A.Magdalinin
