Yesterday\'s trading moved under the European currency power. With the Asian session opening the pair continued its growth, refreshing the session highs around 1.4716. Thereafter, was witnessed a slight decrease, it was due to profit fixation at high levels seen at that moment. As we could see, the first prerequisites of lowering to the support level of 1.4655 stimulated the purchases, that allowed the European currency to set up a new month high at 1.4739. On the whole, the US dollar lost 51 points at Wednesday trading.
Concerning the fundamental data. The consumer price index remained at the same level of -0.2% coming in kline with the experts forecasts. The fact that this indicator stopped falling in the second sequent month can be considered as good signs for further Euro strengthening. The core CPI, which comes from derivate of the consumer price index and oriented to production of food, beverages and tobacco, also remained at the last month reading of 1.3%, although, the economists were expecting for this index to drop to 1.20%.
About the USA. The consumer price index rose to 0.4%, as it was expected. The core CPI remained unchanged at 0.10%. The experts also did predict any changes. The difference between imported and exported goods, services, profits, which are indicated in the active account, fell to -98.80 bln.dollars, less than the estimated decline to 92.0 bln.dollars. TIC net long term transactions data turned out to be very dissappointing. A slump from 90.20 bln.dollars to 15.30 bln.dollars was rather impactful making the greenback fall further against the single currency. The industrial production contracted from 1.00% to 0.8%, but the general climate is still positive, as the analytics were waiting for drop to 0.6%.
The European currency increase was supported by the stock indexes too. On Wednesday, the growth moved further on the American trading floor, with the manufacturing output and positive investors expectations regarding the prospects of global economy recovery.
The technical pattern. The yesterday\'s break through of the upper bound of the rising price channel, which was around 1.4683 still signals about strong bull movement in the market. Worth mentioning that from the beginning of September there was no day when the Euro came off a loser. Since September 04 the EUR/USD pair has surged by 488 points. Herefrom, it may be concluded that by the end of the month we may see a start of moderate Euro correction. The Bollinger bands are still on the upside continuing to show a good liquidity rate in the market.
The next resistance levels are seen at: 1.4738, 1.4778, 1.4821
Support levels are: 1.4688, 1.4655, 1.4619.
Today, I recommend to buy the pair at 1-hour timeframe closing above 1.4741 with the target – T/P 1.4795 and S/L 1.4712
Sell the pair at 1-hour timeframe closing below 1.4701 with the target – T/P 1.4670 and S/L 1.4726.
Best regards,
Analyst: M.A.Magdalinin
