On Wednesday, the European currency demonstrated all its power. With the Asian session opening the pair ticked up, not giving the dollar a chance. Only by the deals closing the pair had lowered from the session highs around 41st big figure. The pair\'s decrease was connected with the long positions fix-up. The first level at 1.4007 was passed through in one breath. The only thing able to stop the pair for a while was the resistance level at 1.4070, but it wasn\'t too long. As a result, the trading day maximum was at 1.4134. All in all, the EU currency gained 130 points versus the dollar. The volatility rate reached 171 points.
The main factors, weakening the greenback and strengthening the single currency, was the U.S. fundamental data and reports from the major American corporations and banks.
From the European essential findings worth paying attention to the consumer price index, which fell by -0.10% coming in line with the experts forecasts. The quarterly reports from Intel and Goldman Sachs bank came in better than the preliminary estimates, giving a huge support to the risky currencies. Amid this data release the U.S. dollar dropped to the 2-week low against majors.
The core consumer price index, according to yesterday\'s datums, remained at 0.20%, although the consumer price index rose to 0.70%, better than the economic predictions of 0.60% growth. This indicator increase is mostly due to the escalation in prices for clothes, automobiles, entertainment and recreation. It\'s summer time.
Despite the Empire State manufacturing index showed a negative reading at -0.60%, it was much better than the experts\' forecasts of -5.30% decline. The industrial production also contracted to -0.40%, but less than the last period result -1.20%.
Yesterday, the U.S. President Barack Obama warned that, possibly, the jobless rate in the USA may rise before moving down. Mostly, it is due to the automotive industry, which is not in the best conditions in the USA. The unemployment rate in America amounts to 9,5%, the highest mark for 26 years.
The technical market pattern is still rather interesting. Yesterday, were broken through the most resistance levels, that allowed the pair to touch the 41st big figure range. The upper line of rising price channel from July 08 was also broken through. Currently, the pair is testing this line again, but this time as a support. The Bollinger bands again signal about steady growing volatility rate in the market and, the zone testing is seen at 1.4174. If the pair ticks below 1.4060, we will touch our channel with the short term target around its bottom bound.
The support levels stood at: 1.4060, 1.4036, 1.4015.
The resistance: 1.4088, 1.4117 (the upper part of our formation), 1.4134 (the yesterday\'s high) and 1.4174.
We watch out for the USA by the economic calendar. In the first part of the trading session will be released the jobless claims data, a lowering to 525.000 is expected, then the TIC long-term transactions volume is due, which indicates the monthly difference between international foreign and internal purchase of long—term securities. The session will be closed by FRS Philadelfia productivity index issue, which is expected to be at -5.0.
Today I recommend to buy the pair at 1-hour timeframe closing above 1.4093 with the target - T/P 1.4134 and S/L 1.4055.
Sell the pair at 1-hour timeframe closing below 1.4054 with the target – T/P 1.4013 and S/L 1.4094
Best regards,
Analyst: M.A.Magdalinin
