FX.co ★ Analytical review of the EUR/USD currency pair with the forecast for Friday (Jan 29)

The European currency continued its permanent decline versus the US dollar at the trades on Thursday.

At the Asian session the pair could renew another local minimum level near 1.3932, then it recovered a little, but with the opening of the European trades it kept falling.

Weak fundamental statistics from the Euro-zone, the German unemployment growth and regular conversations regarding problems in Greece led to rollover from risky assets, which supported the US dollar strengthening.

During the American session the greenback got the support from the labor market, according to which the US unemployment slightly reduced for the previous week.

The trading day closed with the pair\'s decrease by 62 points from Wednesday\'s closing level. The trading volatility amounted to 117 pips.

Fundamental review:

The German seasonally adjusted unemployment rate in January grew to 8.2% and was entirely in line with experts expectations. This figure in December, 2009 was at the level of 8.1%. The seasonally non – adjusted value of this indicator in January rose to 8.6% against 7.8% in December, 2009.

According to received data, the unemployment rate in Germany in January came to 3,617 mln. people, which is higher by 341K, compared to December, 2009, when it was 3,276 mln. persons. Analysts predicted the upturn of the unemployment rate by 20K.

The Euro-Zone Consumer Confidence in the current month remained at the same level of -16 from -16 in December, 2009. Analysts were looking for this index at -15.

The President of the European Central bank Jean — Claude Trichet said yesterday that the EU, the Euro – zone and the USA are still experiencing the stress after the financial crisis which has worsened the precarious position of the Euro at yesterday\'s trades.

The fundamental statistics on the USA appeared to be rather diversified.

The durable goods orders in December, 2009 increased by +0.3% against the analysts\' expectations, who were waiting for the upsurge by +2.0%. The Chicago Fed National Activity Index in December, 2009 dropped to the level of -0.61 versus the analysts predictions of decreasing only to -0.40.

The labor market data added optimistic mood. so, the initial jobless claims for the previous week reduced by 8000 to 470K, Economists in their turn expected the decline by 32000.

The jobless claims index for the previous week was revised to 478000 from the earlier mentioned 482000.

Speaking about Greece, I want to notice that yesterday the level of costs on security of the Greek sovereign debt against the default reached a new high level, as the spread on 5-year credit swap, which is the key indicator of the credit risk, amounted to 397,8 basis points from the spread of 23 bps on Wednesday.

Technical analysis:

The pair keeping trading in the bearish channel and during yesterday\'s session fixed a new low level again. In case the decline continues at today\'s trades, the level of 1.3885 will support the pair. The first resistance levels are 1.3987 and 1.4035.

Bollinger bands are down – directed and signal us about the pair\'s descendant motion continuation. The trading is conducting in the bottom part of the channel and the medium line is located at 1.3958 and it is the dynamic resistance level.

MACD indicator is in the negative zone. Any pair\'s growth may cause a new wave of the Euro purchases against the US dollar.

Today\'s recommendations:

The support levels: 1.3906, 1.3885, 1.3832.

The resistance levels: 1.3987, 1.4035, 1.4094.

Today I recommend to buy the pair at 1 - hour timeframe closing above the level of 1.3972 with the target — T/P 1.4027 and S/L 1.3932.

Sell the pair at 1 - hour timeframe closing below the level of 1.3904 with the target — T/P 1.3826 and S/L 1.3947.

Best regards,

Analyst: M. Magdalinin.