During yesterday\'s deals the European currency did not give a chance to the US dollar. Hanging up a little in the price band at the Asian session, the pair found the support on the part of the major investors, and during the whole European and American trading sessions the pair was rising, renewing the local lows. If at the opening of the deals the pair was trading at 1.4723, then at to the closure of the trading day the advancement came to 152 points, showing the high near 1.4906. The volatility of the trades reached the level of 209 pips.
The fundamental review:
What did lead to such an unusual pair\'s increase after the reduce at the previous week? Let\'s first look at the fundamental data.
Purchasing managers index services in Eurozone showed another upturn to 52.60, compared to 52.30 marked in the previous month. This growth also enhanced the experts forecasts who were expecting this indicator to remain unchanged at the level of 52.30. The growing trend has a positive impact to the national currency. Unfortunately, the PPI in Eurozone could not gladden the great number of market participants. The decline by -0.40% against the forecasted drop by -0.30% put a slight strain on the single currency in the middle of the trading day.
MBA Mortgage Applications demonstrated the upturn by 8.20%, compared to the negative reading for the past period at -12.30%. Although the ADP Employment Change decreased by 24K to -203K, compared to the last figures at -227K, but it was not in line with experts predictions of -190K. I remind you that this indicator determines the changes in the occupational level for the recent month including agricultural sector.
The US Department of Energy reported about the unexpected cutting down in oil stocks. So, the oil stocks (Oct 24 – 30) reduced by -3,936 mln. barrels to 335,914 mln. barrels which led to swing in oil prices and to the European currency strengthening.
The FOMC unanimously voted for maintaining the interest rate at the same level of 0.25%. Due to this, the US dollar dropped versus the Euro. The FRS commentaries on this decision were the following: economic activity continued to advance, but probably it would stay at the low level for some time. The spendings are restricted by work places cutting down and tough credit conditions. There were also noticed the activity at the housing market which had been recently showing the rising. And the most important thing in these commentaries is that in the FRS opinion the interest rates will remain exceptionally low during the long period of time. Such name of the game caused the Euro runup, as the market participants did not find in the FRS commentaries any hints for the rate increasing in the near future, which did no power of good to the dollar.
The technical picture:
Breaking through the resistance level at 1.4732 the Euro strengthened to the level of 1.4766, then, tested it, the pair met the upper boundary of the descendent price channel d/d October,27 which was located near 1.4790. This level also could not sustain the bulls pressure, which led to the breach of this channel boundary and to the weekly high increasing near the 49th figure. There the upward trend was suppressed.
The 100 and 200 day exponential moving averages, which were going near 1.4760 and 1.4797 respectively, were broken through by the same simple way.
Currently, the pair has corrected a little its yesterday\'s trades this led it to drop to the first support level, which are the 200 day exponential moving average and the area of 1.4808.
Bollinger bands are pointed to the upward trend and at this moment are demonstrating a slight liquidity reducing at the market. The pair also tries to break through the middle bands line which is located near 1.4800.
MACD indicator is in purchases area and any pair\'s strong movement down may be considered as a good zone for the Euro purchases against the dollar.
Recommendation for today:
The support levels are: 1.4808, 1.4769, 1.4732.
The resistance levels are: 1.4859, 1.4906, 1.4947.
Today I recommend to buy the pair at the 1- hour timeframe closing above the level of 1.4883 with the target — T/P 1.4947 and S/L 1.4839.
Sell the pair at 1- hour timeframe closing below the level of 1.4815, with the target — T/P 1.4774 and S/L 1.4860.
Best regards,
Analyst: M. Magdalinin.
