In the morning European deals till the American trading floor opening we could see a strong pressure on the European currency, afterwards, the EUR/USD lowering to 1.4565. Such decline was due to weak fundamental statistics of the Eurozone and the European stock indexes, which demonstrated a slowdown. Only the second part of the trading day put everything in order. Firstly, such significant Euro drop was considered by major investors as a good range for purchase, secondly, the US microeconomic figures release also lent support, most of them showed growth, so it gave some optimism to the investors mood. By the closing, the European currency had been trading near the new maximum at 1.4688 not giving any chance to the dollar. The total pair\'s rally amounted to 36 points.
As it was mentioned before, the Euro\'s decrease was due to the Germany economic sentiment index, which rose to 57.70, compared to the last year reading of 56.10, but turned out to be worse than the experts forecasts waiting for an increase to 59.80. Economic sentiment ZEW index demonstrated more confidence coming in better than it was expected rising to 59.60 against 54.90 in the last month. Amid this positive tune the Eurozone closed its session.
A lot of players were watching closely over the US microeconomic statistics. Due to general positive news the Euro managed to reach new month highs. The retail sales index ticked up to 1.10% against the last month indicator of -0.5%, higher than it was estimated earlier. The producer price index also advanced by 1.7% versus the last result of -0.9%.
The most surprising appeared to be the retail sales data, with the last month result of -0.2% they succeeded to move up to 2.70%. Such surge was caused by the car sales improvement within the framework of goverment program, providing a recoupment in exchange for old cars. Other goods sales dynamics also turned out to be rather favourable, up by 0.6%. The producer price index jumped by 0.20% against the same period lowering to -0.10%.
There was no mess because of the FRS Head Ben Bernanke\'s speech. Some observations regarding the securitization market size, technical recession end and still weak global economy were considered by «audience» more positive than it was reqiured.
The technical picture remains steady. New local highs step closer to the upper bound of the up-going price channel of August 13 and, possibly, the further growth will be restrained by this level. The Bollinger bands demonstrate high volatility rate, at present, the pair is trading in its upper channel continuing the rising trend. If the pair manages to test the 47 big figure zone it will meet a strong resistance level at 1.4731, which came from the low of August 21, 2008.
The current resistance levels are: 1.4688, 1.4702, 1.4731.
The support levels: 1.4655, 1.4620, 1.4534.
Today, I recommend to buy the pair at 1-hour timeframe closing above 1.4703 with the target – T/P 1.4740 and S/L 1.4671
Sell the pair at 1-hour timeframe closing below 1.4650 with the target – T/P 1.4614 and S/L 1.4675.
Best regards,
Analyst: M.A.Magdalinin
