Yesterday’s Asian deals did not lead to significant market adjustments, however, with the European session opening the pair began to refresh the month lows steadily. Having broken through the support at 1.4766 it fell to the bottom channel bound to 1.4710 which was overcome immediately, it was its third testing that led to the pair’s lowering to 1.4625. The pair was affected by negative dynamics of the Eurozone and American stock markets and falling oil prices. Thereafter, in the second part of the American deals the European currency managed to rebound the most part of losses. By the closing the pair had fixed at 1.4716. On the whole, the US dollar rose by 60 points. The trading volatility rate amounted to more than 186 points.
The fundamental analysis:
Yesterday, the market was no too oversaturated with the fundamental statistics, due to this the players were mostly paying attention to Oil and Gold and the main stock indexes. The members of the European Commission remained the Eurozone GDP forecast for 2009 at -4.0%. The GDP estimate for 2010 reached +0.7%, 2010 +1.5%. The average reading of the HICP inflation for 2009 was also revised from +0.4% to +0.3%;
The comments of the EU Commissioner Almunia regarding that there are no risks for deflation in the Eurozone also lent a significant support to the European currency.
In the USA was witnessed an uptick of manufacturing orders which increased by 0.9% in September versus the growth forecast of 1%. This indicator moved down by 0.80% in August.
The IMF comments: The global economy recovery is still unstable; it is not time for monetary policy tightening; the financial stimulating measures should be extended in 2010; reliable exit strategies must involve something more than stimulating measures decline. This sentiment brought a piece of positive to major players, as a result, the pair succeeded to rally by the trading day closing.
The technical pattern:
As I expected, the pair worked out the “triangle” formed yesterday overcoming the bottom line at 1.4715. Presently, the pair is testing it from the other side trying to jump higher and go back to its usual side corridor. The next resistance level is 1.4732 which is able to bound the upward movement, and the 100-day exponential moving average at 1.4758.
The Bollinger bands are reversing after yesterday’s downturn, however, a good liquidity still remains in the market which is seen due to wide line channels.
MACD indicator is in the sales range, but moves closer to zero mark signaling about possible sideward trend of the pair in a short term.
Recommendations for today:
This day will be essential from the fundamental aspect. Today will be released the non-farm employment data by ADP and also the interest rate decisions from the USA which is to stay at 0.25%, according to the estimates.
Support levels: 1.4680, 1.4625, 1.4600.
Resistance levels: 1.4732, 1.4766, 1.4808.
Today, I recommend to buy the pair at 1-hout timeframe closing above 1.4738 with the target – T/P 1.4785 and S/L 1.4713
Sell the pair at 1-hout timeframe closing below 1.4696 with the target – T/P 1.4646 and S/L 1.4722.
Best regards,
Analyst: M.A.Magdalinin
