Yesterday\'s up - going movement of the European currency at Forex market was mainly due to the positive expectations of major investors, disposed for the nearest economic recovery. Crude oil quotations, the stock market and positive fundamental U. S. data acted a considerable part in it.
The trades opened with a slight Euro grow against the U. S. dollar, however by the beginning of the European trading session the European currency lost some positions which led to the pair\'s decline near the 42nd figure to the level of 1.4202. Frankly speaking, the pair\'s decline was limited by these levels. With new force, supported by the fundamental data, EUR/USD broke through the resistance level near 1.4300 and reached the basement of the 44th figure, fixing a new local maximum at the level of 1.446. The trading session was closed near 1.4413. Totally, the European currency strengthened by 143 points against the dollar.
Now let\'s look a little bit more detailed at those events which influenced on such a sharp increase of the European currency. As it was known yesterday, German retail sales decreased by -1,80%, compared to the previous month, although experts were waiting for the growth by 0,40%. Last decrease was marked at the level of -1,30%. The PMI manufacturing appeared to be higher than experts expected and came to 46.30 which imparted confidence to the Bulls. On the back of these data the Euro updated the sessional local maximum, cumulating momentum for growth step by step.
The U. S. fundamental data also brought a lot of positive emotions and allowed the Euro to reach the record — breaking high level at the 44th figure. Also I want to add that construction spending increased by 0,3%.
The U. S. Treasury Secretary Timothy Geithner statements did not bring clarity, according to his opinion American economy demonstrates the signs of recovering, however the additional measures will be needed to confirm achieved positions.
The head of the National Economic Council at the White House Lourence Summers supported the U. S. economy in his speech. In his opinion, the U. S. growth which is at the 20 — month recession, will more likely resume in the second part of this year.
As it was mentioned above, the crude oil quotations added positive mood, which at the Asian trading session on Monday pierced the reading of 70 dollars per barrel.
The technical picture again returned to its upward channel from July, 07. The further pair\'s growth is restricted by its upper border. Currently, Bollinger bands are slightly narrowing, showing the reduction of market liquidity. We can consider its levels as dynamic support and resistance levels in the short — term trading. The level of 1.4377 where the middle bands\' line is located, also appears to be the first support level, breaking through of which could drop the pair to 1.4326, where the low Bollinger bands line is disposed, and the low border of our ascending price channel.
The upper border of ascending channel is a resistance level and also yesterday\'s local maximum of 1.446, breaking through of which allows the pair to grow to the psychological level of the 45th figure.
I want to turn your attention to a possible correctional pair\'s reducing due to the continuing increase during the previous several days and testing the important resistance levels in mid — term trading.
Today, I recommend to buy the pair at 1 - hour timeframe closing above 1.4452 with the target – T/P 1.4542 and S/L 1.4381.
Sell the pair at 1 - hour timeframe closing below 1.4371 with the target – T/P 1.4310 and S/L 1.4426.
Best regards,
Analyst: Magdalinin M.
