Yesterday\'s trading day passed under the bull tone. With the Asian session opening and in the morning European deals, the single currency continued its growth against the U.S.dollar. Mostly, it was due to Europe\'s stock exchanges and increasing crude oil prices, which had reached the mark of 64 dollars/barrel by the middle of the trading day. Having broken through the resistance levels at 1.4182 and 1.4195, the European currency ticked up, touching more essential resistance at 1.4245. After showing the session maximum at 1.4250, the rising trend was restrained, and till the end of the trading the pair was in the channel 1.4182-1.4245. All in all, Euro rallied by 115 points versus the greenback, the volatility rate amounted to 142 points.
From the Eurozone fundamental data worth pointing out the Germany producer price index, which lowered by -0.10%, compared to the last month. The forecast did not come in line with the experts\' expectations with the growth by 0.50%. This information did not impacted the European currency significantly, as the stock indexes continued the ascending tendency, which has been lasting for 6 days.
The leading index, measuring the economic climate, which compounds 10 leading indexes including average weekly hours, new orders, share rates and interest rate spreads, showed an upturn by 0.7%, compared to the last period and coming in better than the preliminary estimates of the analysts, who were looking for an increase by 0.5%.
The stock indexes and the European currency strengthening was stimulated by the announcements of director of the White House Budget Office Peter Orszag. According to him, «the U.S. economy left the «free falling» condition, however, the economic growth has not recovered yet». He also said that the GDP figures for Q2 will be better than it was in Q1.
The U.S. Treasury Secretary Timothy Geithner indicated that he would like to recieve more information from banks regarding the state aid funds emloyment within the Troubled Asset Relief Program (TARP). To remind you, this program was developed specially for handling out the «trouble» assets.
The technical image refreshed the 6-week low and, at present, the European currency has new fundamentals. The level of 1.4340, which is related to the local minimum of June 03 and where stood the «zero» Fibonacci correction level, remains attainable. Possibly, in a short term we are to see a slight correctional movement or a channel trading, as for an outbreak to the level mentioned above the bulls need some more force.
The rally was also restrained by our up-going price channel of April 24. Its bottom bound, which was the support level before, restrained the pair\'s tick up and most likely that it will do it further. Now, it is possible to point out two srtong lines of the upward channel. The first one restraines the pair\'s growth as it was said above, the second one takes its rise from July 08.
Besides, worth noticing that presently, the Bollinger bands are in the neutral zone and narrowed tighly, signaling about changing tendency and the trading volume decrease. At present, the Bollinger bands are not topical for the trading.
The resistance levels are located at: 1.4249, 1.4270, 1.4340.
The support: 1.4195, 1.4182, 1.4147.
The economic calendar for our pair is almost empty today. We will be able to witness only the speech of FRS Head Ben Bernanke, which will take place at 18.00 (Moscow time).
Today, I recommend to buy the pair at 1-hour timeframe closing above 1.4274 with the target T/P 1.4335 and S/L 1.4235.
Sell the pair at 1-hour timeframe closing below 1.4181 with the target – T/P 1.4135-1.4109 and S/L 1.4224.
Best regards,
Analyst: M.A.Magdalinin
