On Monday the euro declined against the US dollar, as the majority of market participants turned their attention to Euro-zone problems after last week their attention was focused on the US data.
The weak fundamental data on Euro-zone were also exerting pressure on the European currency.
The trading ended in favor of the US dollar that strengthened against the euro by 135 points, the trading volatility was 201 points.
Fundamental review:
According to Destatis the German exports grew considerably in September compared to the previous month. In September the German export rose by 3% to EUR 84.3 bln. in comparison with the previous month, and the import decreased by 1.5% and stood at EUR 68.7 bln.
In Germany the trade surplus edged up to EUR 16.8 bln. versus EUR 9 bln. in August. The current account surplus increased to EUR 14 bln. against EUR 5 bln. in August.
The economist forecasted that the foreign trade surplus would be EUR 12 bln.
According to the German Ministry of Economy the industrial production decreased by 0.8% compared to the previous month mainly because of the decline by 2% in the production of intermediate goods. The economists expected that industrial production would rose by 0.5% compared to the previous month.
Technical analysis:
The downside movement that was formed on last Friday and prevailed on Monday is observed. The pair has broken through several key support levels and stopped near 1.3891. In a midterm the uprising price channel can be also broken out. The upper limit of this channel is near the highs of 3 and 4 of November 1.4152 and 1.4265. The lower limit is marked with the today’s low of 1.3834.
The mark of 1.3891 will be the key resistance level, from which the movement can continue to 1.3944 and 1.4002.
In case of the downtrend the first support area will be 1.3844, from which the decline can last to 1.3807 and 1.3773.
The Bollinger Bands are directed downwards, thus pointing to decline on the market. The trading is driven in the lower part of the channel and the mid band positioned in the area 1.3898 is a dynamic support.
The MACD indicator is in the purchase area; however, we can see the first signs of divergence, as its recent reading could not move lower the previous low, whereas the pair refreshed it.
Recommendations for today:
Support levels: 1.3844, 1.3807, 1.3773
Resistance levels: 1.3891, 1.3944, 1.4002
Today it is advisable to buy the pair at a 1-hour timeframe closing above the level of 1.3901 with a target - T/P 1.4069 and S/L 1.3852.
It is possible to sell at the closing of a 1-hour timeframe below 1.3819 with a target – T/P 1.3688 and S/L 1.3860.
