The European currency fell again by the end of Friday’s deals after Fitch Rating agency had announced about Spain credit rating lowering to AA+ level.
In the first part of the day, the euro growth was observed which was caused by the Chinese authorities’ confirmation that their Forex reserves would include euro-denominated assets as before, however, on the North-American session the US dollar strengthened further.
The trades closed with the American dollar rising which increased by 72 pips against the euro, the volatility totaled to 193 points.
Fundamental review:
On Friday, the European currency gradually was growing as investor sentiment increased after the interest rate for the US dollar credits between banks in the Eurozone dropped for the first time in three weeks.
The German import prices index growth sustained the pair, which rose by 2% in May against the expert forecast of 1.5% increase.
The US fundamental statistics also supported the greenback.
The US consumer spending remained unchanged in April. According to the US Commerce Department, the consumer spending being one of the major figures of growth of the US economy did not change in April following the 0.6% upsurge in March. Personal income gained by 0.4% in April, which was caused by the situation improvement on the labor market and low inflation. Economists were predicting the income growth of 0.4% in April and spending increase of 0.1%.
The corrected Chicago PMI declined to 59.7 in May 2010 versus 63.8 in April. More detailed, the purchase price index stood at 64.0 in May against 71.4 in April, the supply index went up to 65.1 in May versus 64.9 in April and the employment index moved down to 49.2 in May versus 57.2 in April.
The final consumer sentiment index of Michigan University slightly increased to 73.6 points in May against 72.2 in April.
Technical analysis:
The pair is trading within an upward price channel from May 26. The lower limit lies at the low of 1.2151, the upper limit lies at the high of 1.2450.
Bollinger bands are parallel each other pointing out sideways movement. The trading is held in the lower part of the bands and the mid-line, which lies at 1.2310, is resistance.
MACD indicator is in the sale area, however, its direct proximity to zero mark also indicates sideways motion of the pair in short-term outlook.
Today’s recommendations:
Support levels: 1.2280, 1.2239, 1.2199.
Resistance levels: 1.2341, 1.2390, 1.2451.
Today it is advisable to buy the pair at 1-hour timeframe closing above the level of 1.2341 with a target - T/P 1.2390 and S/L 1.2280.
It is possible to sell at the closing of 1-hour timeframe below 1.2258 with a target – T/P 1.2199 and S/L 1.2314.
