The pair continued the decrease at the Asian treading session on Monday, having fallen to the strong resistance level around 1.4534. During the European deals, the EUR/USD pair tested this level several times, but it did not surge below it. Inability of the dollar to continue the strengthening caused great volume of the European currency purchases that led the to sharp pair growth to the opening level and then to the renewal of a new local maximum around 1.4654. The deals closed mainly in favor of euro, without any ghost of a chance for the US dollar.
Concerning the fundamental data, it is necessary to notice that Eurozone industrial production decreased by 0.1 % in comparison with the last period and reached a level of 0.3 % that completely coincided with the experts’ forecasts. The quarter employment change slumped to 0.5 %.
Basically, the sharp growth of the European currency can be related to the statement of US president B. Obama, who noticed in his yesterday\'s speech, that the US economy is already comes back to the normal functioning, but lot of time is needed a for its full restoration. He also called for requirements strengthening concerning the capital and liquidity and criticized the Wall-street, which still ignores the lessons of the Lehman crash and hope for one more portion of taxpayers’ money.
The technical analysis. It is already formed two sideward channels. The bounds of the first one are 1.4534-1.4597 and the second one, where the pair is trading now, is 1.4619-1.4664. Probably, we will observe trade in these price ranges during some time. Continuation of the European currency growth is not excluded, it can be constrained by the top line of the rising price channel of August, 13. One more strong resistance level is around 1.4731, the minimum of August 21, 2008.
At this graph it is visible that 200-day exponential moving average come nearer to the bottom bound of the upside price channel. Therefore, when the pair breaks through the support level around 1.4534, two more strong levels will resist its further decrease attempts. It is the most likely that the pair will again raise the large investors appetite in these ranges, and the next strong pair growth in intermediate term prospect will begin with these ranges.
As I mentioned above, the sideward motion continuation is not excluded, because the Bollinger bands are narrow the bounds, informing us about liquidity reduction in the market. The bounds of this indicator can be considered as possible dynamic levels of support and resistance for a while.
In conclusion, I would like to pay your attention to density of the US macroeconomic statistics, which will be published today. Therefore, we will see great volumes, both from the bears, and from the bulls, in the second half of the trading day, but who will head this procession, we will understand only tomorrow.
Today, I recommend to buy the pair at 1-hour timeframe closing above 1.4657 with the target – T/P 1.4740 and S/L 1.4620.
Sell the pair at 1-hour timeframe closing below 1.4596 with the target – T/P 1.4539 and S/L 1.4626.
Best regards,
Analyst: M.A. Magdalinin
