Yesterday, the EUR/USD pair traded in sideways channel most likely, as there was no important fundamental statistics and the leveling off short positions among the large players managed to hold the European currency from a decline to new lows.
In the first part of the day, the US dollar began to fall because of a good report about the German manufacturing orders, however, after it reached first significant resistance levels, the pair started gradual falling.
The trades closed with the greenback growth of 12 points, the fixation of a new yearly low at 1.1874 and the volatility of 120 points.
Fundamental review:
As it was noted above, the European currency was supported by the report about Germany’s manufacturing orders, which rose by 2.8% in April, compared to the previous month. The domestic orders increased by 2.9% in April, while the external orders edged up by 2.8%.
The economists were expecting the orders to shrink by 0.5%. the March reading was revised upwards. According to these reports, the orders surged by 5.1% in March m-o-m.
It should be mentioned that Germany’s government on Monday announced the budget saving measures, which are 26.6 bln. euro for 2011-2014. These measures goal is a deficit reduction to correspond to the constitutional requirements and the lowering of worries regarding debt situation in the European Union.
The IMF on Monday appealed to the Eurozone authorities to take measures for struggle against the budget deficit and the weakness of the financial system.
Technical analysis:
The pair is trading in the uprising price channel with the yesterday’s low at 1.1874. The second point of the support line is today’s low of 1.1911. we see that this channel’s character is correctional and there is a high possibility of the euro plummet in next few days.
To stop the downfalling wave of the pair, the growth must be continued at least to 1.1989, which will open the way to 1.2035.
In case of the slump below 1.1911, the decline can last to annual lows, from which the pair will drop to 1.1750.
Bollinger bands are parallel, which confirms the correctional movement of the pair, which is in the sideways channel of 1.1911-1.1989.
MACD has approached zero mark, but there are no signs of significant growth because of that it is advisable to open short positions at the pair coming close to 1.2035.
Today’s recommendations:
Support levels: 1.1911, 1.1862 1.1750.
Resistance levels: 1.1989, 1.2035, 1.2106.
Today it is advisable to buy the pair at 1-hour timeframe closing above the level of 1.1985 with a target - T/P 1.2086 and S/L 1.1940.
It is possible to sell at the closing of 1-hour timeframe below 1.1909 with a target – T/P 1.1800 and S/L 1.1945.
