Taking into account all seriousness of fundamental data, released during the trading day, the European currency behaved itself in a rather calm way. During the Asian trading session pair fell from the day high and tried to test the range of 1.4808, which held the pair from further decline. By the middle of the European session EUR/USD returned to the opening level, and by release of interest rate decision, was testing 1.4872 level. Having refreshed new high by the day closing, the pair has lowered and closed the deals with a small advantage of euro. The trades volatility was at 110 points.
The fundamental review:
Eurozone retail sales have decreased by 0.70% versus analysts’ forecast who expected a growth by 0.30%. The last value of the given indicator showed a drop of 10%. The ECB remained the key rate without changes at the level of 1.00%. Such decision was accepted unanimously. Strangely enough, but this data has not caused any dynamics on currency pair EUR/USD as the market has already considered this fact, and all attention was compelled to comments of the ECB’s president Jean-Claude Trichet. The first minutes of the president speech and his statements concerning the economic recovery in gradual pace by 2010, and also risks equation of further economic prospects have given confidence to both the European currency, and the stock markets of Europe and the USA, having allowed pair to update a session high. Also Trichet noticed that inflationary expectations are durable restrained and the inflation growth is mostly caused by basic effects.
Initial jobless claims data of the USA was also positive. According to the Labor Department report the number of Initial jobless claims dropped by 20 000 to 512 000. Economists forecasted a fall by 5000.
Productivity of labour in the USA Q3 advanced too. In accordance with the report the productivity of labour in non-farm sector has exceeded experts expectations and rose by 9.5% compared to the same period of the last year. Analysts were waiting for hike by 7.0%.
Unit labour costs tumbled by 5.20% over the past period against economists prediction of relapse by 3.80%.
Technical picture:
The early pair sag was bound by the 200 day exponential moving average, which was lying at 1.4808. Rebound from this level led to a break through of the resistance level of 1.4859 and increase to new 1-week high of 1.4919. However, the market participants were not ready for such huge growth and this brought to correctional lowering prior to day closing. Now the pair movement to any side is restrained by 1.4859-1.4919 channel. A break through of one of the levels can lead to significant move.
We can see that the pair now is trading above 200 and 100 day exponential moving average, located at hour graph, and 100 day exponential moving average is trying to break 200 day from bottom to top. If it manages to do that we will be able to see new month maximums in the next week. However, sticking in the sideward flat for some time is not excluded.
Bollinger bands are moving to the sideways trend, showing a significant slump of the market liquidity at the early deals.
MACD indicator tried to follow the pair upsurge yesterday, but it could not renew the last high, having drawn the first good signs of divergence. It is necessary to pay attention as well that the indicator comes nearer to a zero mark that signals about pair\'s entry to the sideward channel.
Recommendations for today:
The support levels: 1.4859, 1.4808, 1.4769.
The resistance levels: 1.4919, 1.4947, 1.4983.
Today, I recommend you to buy the pair at 1-hour timeframe closing above 1.4905 with the target – T/P 1.4947 and S/L 1.4871
Sell the pair at 1-hour timeframe closing below 1.4855 with the target – T/P 1.4809 and S/L 1.4886.
Best regards,
Analyst: M. Magdalinin.
