The Friday growth of the European currency against the U.S.dollar was mostly due to the bear profit fix up, the U.S. fundamental data and the stock exchanges. The first part of the deals proceeded relatively calm within the channel 1.4068-1.4140. Only with the American session opening the European currency turned upwards bouncing back almost all losses sustained 2 days before. Having broken through the resistance level at 1.4180 the pair also tested the level of 1.4250, fixing a new local minimum at 1.4310. All in all, the Euro rallied by 187 points against the dollar. The Eurozone consumer price index lowered by -0.60%, compared to the last year. The decline came in slightly worse than the experts forecasts of -0.40%. The last downside reading was -0.10%. This indicator measures the inflation growth pace, which is used for making upturn or downturn forecasts of the interest rates, and consiquently, the national currency strengthening. The jobless rate in the Eurozone increased to 9.40%, compared to the last period, which showed a tick up by 9.30%. Although, the data turned out to be negative signaling about the unemployment rate advancement, but the market perceived it positively because the indicator growth forecasts were at 9.70%.
A strong factor, which impacted the market and the whole trading on Friday was the U.S. GDP data. The experts forecasts showed a decrease by -1.30%, however, the result had exceeded all expectations at -1.00%. Worth pointing out that the American GDP has been moving out steady of the negative zone since March 2009. To remind you, ther last period estimate of the U.S. GDP reached -6.40%.
After this figures release the European currency recovered its growth with the sharpest pace versus the greenback. Mostly, it was due to positive expectations of major players, which were affirmed by the U.S. GDP report. The investors risk inclination increased, hereafter followed the profit fix-up of short positions.
The technical pattern demonstrates correction. Having touched the maximum around the 43 big figure, the pair\'s growth was restrained by the bottom line of the rising price channel of July 07. Also worth noticing the correctional Fibo level of 0.00%. The 200-day moving average was overcome easily, taking its course around 1.4140 at that moment. Presently, the Bollinger bands show a high liquidity rate at the market. A dynamic resistance appeared to be the middle bound at 1.4225 and the bottom line at 1.4125.
The support levels stood at: 1.4195, 1.4140, 1.4069
The resistance levels: 1.4300, 1.4340 with the target — 1.44.
Today, I recommend you to buy the pair at 1-hour timeframe closing above 1.4266 with the target – T/P 1.4310 and S/L 1.4225.
Buy the pair at 1-hour timeframe closing below 1.4225 with the target – T/P 1.4145 and S/L 1.4270
Best regards,
Analyst: M.A.Magdalinin
