During yesterday\'s trades the European currency together with the US dollar behaved rather steadily, despite the serious fundamental data which were to be released that day.
While early European session the trading took slightly shaky form, showing the uprise to 1.4559 and declining to the area of 1.4511, then, after the US macroeconomic statistics release, the pair managed to fix the sessional high near 1.4589. Before the FOMC Rate Decision announcement in the USA the EUR/USD currency pair decreased to 1.4535. But the publication by itself had not caused a significant volatility at the market on Wednesday.
The trades closed with a short advantage in favor of the American dollar. The trading volatility came to 78 points.
Fundamental review:
The fundamental data from the Euro – zone gave a fair support to the single European currency.
Thus, the Euro – zone preliminary Purchasing Managers Index grew to 53.10, compared to the analysts predictions, who were waiting for this index increasing only to 52.60. The German preliminary Purchasing Managers Index also showed the advance to 53.10 versus the forecast at 52.00.
The US statistics turned out to be diversified.
MBA mortgage applications index for week ended December,12 came up to +0.3%.
In November the Consumer prices index was in line with experts expectations and demonstrated the growth by +0.4% m/m, on an annualized basis it rose by +1.8%. The Core consumer prices index remained at unchanged level in November. Analysts, in their turn, predicted the upturn by +0.1% m/m.
The Current Account Balance in the 3rd quarter was marked by a negative raise to -USD 108.0 bln., which coincided with analysts expectations. I remind you, that in the 2nd quarter this index amounted to -USD 98.0 bln. (revised reading).
The number of Housing starts increased by +8.9% to 574K in November, but the experts foresaw the pickup to 579K. The Building permits advanced by 0.6% to 854K against the forecast of 570K.
Yesterday the FOMC kept the interest rate at the level of 0.00% - 0.25%. This decision was passed by a solid vote.
It was noticed in the FRS comments that the economic activity was continuing to strengthen and the negative labor market dynamics was weakening. Some signs of improvement have appeared at the labor market. Economic conditions such as low level of resource consuming, weak inflationary pressures and stable inflationary expectations, more likely, will provide the interest rates maintaining at the lowest level for a long period of time. The situation at the financial markets became more favorable to economical expansion. The inflation will remain at the low level for some period of time.
Technical picture:
The pair was in a sideway channel of 1.4503-1.4571 till today\'s morning trades, but with the opening of the Asian session the situation had dramatically changed. Currently, this trading tool has broken out the support levels of 1.4503 and 1.4466 and reached the new low near 1.4368, having corrected slightly at this moment. The support level at 1.4382 (the high from September 01, 2009) restrained the pair\'s decline.
The low line of the descendant price channel from Dec 07 was also breached.
Now Bollinger bands are showing us a great liquidity at the market and in case the correction continues, then the growth will be kept by a middle bands\' line, which is going near 1.4503.
MACD indicator is entirely located in the sales area and any significant upsurge will be considered as a potential field for selling.
Today\'s recommendations:
The support levels: 1.4408, 1.4382, 1.4360.
The resistance levels: 1.4466, 1.4503, 1.4534.
Today I recommend to buy the pair at 1- hour timeframe closing above the level of 1.4544 with the target — T/P 1.4614 and S/L 1.4470.
Sell the pair at 1- hour timeframe closing below the level of 1.4364 with the target — T/P 1.4266 and S/L 1.4454.
Best regards,
Analyst: M. Magdalinin.
