As I calculated yesterday the downward movement on the EUR/USD currency pair continued, marked new local lows. Only at the first hours of the Asian trading session the pair managed to reach a maximum level of 1.4670, after which the dollar continued its strengthening. By the opening of the European trading session the pair was near the area of 1.4563, yielding nearly 100 points from the opening. Some correctional rollback to the level of 1.4596 has provoked a new wave of the European currency sales among the market participants, which caused even larger pair\'s reduction to a strong support level of 1.4534. The deals closed near 1.4548, bringing one small victory into the US dollar\'s piggy bank.
As we can see, the first market day of October was marked by a very high trading volume. The retail sales in Germany dropped in August to -1,5% (m/m) and to -2,6% for the same period lat year. Experts were waiting for the growth by 0,1%. The purchasing managers manufacturing index (PMI manufacturing) in Italy increased to 47,6 in September against the previous period which was marked by growth to 44,2. The purchasing managers manufacturing index (PMI manufacturing) in France was also observed by rising which turned out to be at the level of 53,0 in September versus 50,8 in August. The purchasing managers manufacturing index (PMI manufacturing) in Germany came in line with experts\' forecasts and appeared to be at 49,6 in September, compared to the figure of 49,2 in August. The purchasing managers manufacturing index (PMI manufacturing) in Eurozone was also marked by increasing to the level of 49,3 in September against 48,2 in August. The unemployment rate in Eurozone in August coincided with experts\' expectations and turned out to be 9,6% versus 9,5% in July. I want to add that this indicator in Eurozone in August was the highest one since March, 1999.
The US dollar strengthening against the Euro can be connected with some statements of the International Monetary Fund (IMF). So, it was announced yesterday that inability to achieve the overbalance of the economy could reduce GDP by 2.2 percentage points. The IMF lowered the US GDP forecast for 2009 to -2,7%, but it is waiting for growth in the second part of this year. In conclusion, the IMF enhanced the economy\' appraisal for 2010, but expects that the increase will be weak and approximately amount to 1,5%.
These comments were incredulously perceived by major investors which possibly led to Euro\'s decline continuation.
Personal income in the USA increased by 0,2%. Economists expected this indicator at the level of 0,00%. But personal spending grew even more to 1,3%, compared to the previous data of 0,3%. The US jobless claims for the previous week grew up on 17K to 551K. Experts were waiting for increasing only to 535K. Therefore, the conclusion must be done from this that the labour market is still recovering slowly, showing us now the recession then another unemployment growth. Pending home sales in the USA in August rose by 6,4% against the 3,2% increasing for the last period. The purchasing managers manufacturing index (PMI manufacturing) in the USA dropped to 52,6 in September, compared to 52,9 fixed in August. Experts were looking for the upturn to 54,60. The decline of this index also had a bearing on the overall investors\' picture in short – term outlook, giving the US dollar a special opportunity to continue its strengthening, which in fact happened.
Some main ideas could be mentioned in Fed Chairman B. Bernanke speech. According to his words, the FRS keeps a sharp lookout for commercial property market. Speaking about the dollar by itself, he said that there was no imminent threat for the dollar\'s status as a reserve currency; the American currency would be in danger unless not to control the budget deficit. Bernanke is warrant that the Fed will be able to support the economy without provoking the inflation. No comments.
Regarding the technical picture, everything is without special difficulty. Currently, the pair is located in the downward channel which we have built in yesterday\'s review. The closure below the 46th figure, as I mentioned earlier, led to the further pair\'s decline and more likely that the trading session today would be in a lateral channel of 1.4567 – 1.4506, with possible attempts to further decrease below the 45th figure.
Bollinger bands are gradually lowering the liquidity and are parallel to each other, which once again tells us about pair\'s entering to a flat movement. MACD indicator is in the sales zone, so any significant pair\'s increase will be regarded as a perfect area for purchases.
Don\'t forget that today is Friday and more likely that all emotions will recede into the background and we will observe only a cold speculative trades.
Today I recommend to buy the pair at 1 – hour timeframe closing above 1.4555 with the target – T/P 1.4598 and S/L 1.4529.
Sell the pair at 1-hour timeframe closing below 1.4503 with the target – T/P 1.4460 and S/L 1.4534.
I wish good weekend to all of you!
Best regards,
Analyst: M.A.Magdalinin.
