Yesterday\'s trading with the EUR/USD currency pair was mixed, but particularly in favour of Euro. The Asian market lowered our trading instrument to the range of 39 big figure, but did not succeed to break it through. With the European deals opening there was witnessed a demand for purchasing the single currency. An outbreak higher than the Friday closing (1.3936) allowed the pair to reach the next resistance level at 1.3978, setting up a local maximum at 1.3991. As the range mentioned above resisted the bulls pressure, the pair had to tick down to the opening rate. The trading day closed in favour of the European currency amid the U.S. microeconomic data. Totally, EUR strengthened by 41 points against USD, the trading volatility rate stood at 104 points.
Mostly, the 16-nation currency rally was due to the ECB\'s President J-C. Triche. According to him, «the interest rates on Euro funds are comparable to the dollar funds rates», signaling in its turn that in a short term the ECB doesn\'t intend to raise the interest rates and such policy is convinient for everyone. Triche emphasized that all forces should be turned to the economy functioning support and also the bailout package development.
The Eurozone currency was also supported by the monthly budget report from the USA. The budget decrease came in worse, compared to the last month reading of -94.30 bln.dollars. The experts were looking for a sharper drop to -65.50 bln.dollars, but this result is much better than the last one of -189.70. Although the budget is in the negative zone, but most likely that this indicator satisfied the major investors, that led to the Euro\'s increase to the 40 th big figure base-line.
From the technical pattern can be pointed out the short term ascending trend, which took its rise on July 08. The general picture is the same. The Bollinger bands also demonstrate the rising trend and high liquidity rate in the market. Taking into account that for today is scheduled a big volume of fundamental data from the Eurozone as well as from the USA, the Bollinger bands can be considered as dynamic resistance and support levels. The upper bound comes in line with the first resistance level at 1.4007, the bottom bound fixed at1.3941. Currently, the pair is trading around the middle bound, which appears to be a support. In the range of 1.3967 takes place the 200-day exponential moving average, which can be seen at 1-hour graph. As it stood below the trading rate it signals about the rising trend continuation.
The resistance: 1.3995 (23.6 Fibo level), 1.4007, 1.4070
Support: 1.3959, 1.3941 (bottom Bollinger band), 1.3916, remeber the bottom bound of our channel
From the essential data we will see the Germany economic sentiment index, the industrial production report and ZEW economic sentiment index. Pay attention to that the result of the German economic sentiment index will be very important, the experts estimate is 48.00, coming closer to the mark of 50. The last indicator was 44.80. If the analysts\' forecasts come true, a chance for Euro growth will be great.
The USA will gladden us with the retail sales and producer price indexes, and the retail sales findings. I should remind that the retail sales index has been demonstrating growth since April. In the USA this index came in a positive zone in May 2009.
It follows herefrom that if this data come in line with the economic expectations, this will stimulate the stock indexes upturn and the whole stock market impovement, thereafter, the European currency\'s rally, as there won\'t be a necessity to keep holding the reserve assets till the next essential reports.
In conclusion. The U.S. President Barack Obama suggests that the American economy doesn\'t need the second stimulus measures package and he is sure that 787-billion dollars package is quite enough to overcome the crisis already now. That was not the first announcement of such kind. But don\'t take strictly his words and look at this week fundamental datums, after that it is possible to make some conclusions.
Today it is recommended to buy the pair at 1-hour timeframe closing above 1.4011 with a target – T/P 1.4071 and S/L 1.3970.
Sell the pair at 1-hour timeframe closing below 1.3955 with a target – T/P 1.3915 and S/L 1.3998.
Best regards,
Analyst: M.A.Magdalinin
