The European currency continued to fall against the dollar during the first half of Wednesday’s trading session. However, encouraging fundamental data on housing market from the USA managed to stop the descending trend of the pair and it restored some of the lost positions.
The session drew a tie: the opening price was absolutely the same as the closing price. Miracles happen.
Fundamental Review:
As it was noticed above, housing starts increased in the USA in August. According to the US Trade Department, the housing starts grew 2.3% and made up 750,000 houses annually. In contrast to the same period last year, the index accelerated 29%.
Economists expected that housing starts will hit the reading of 765,000 houses a year or 2.5% against July.
Existing home sales also increased in the USA. According to NAR, the index gained 7.8% in contrast to July and fixed at 4.82 bn houses in a year. In 2011 the sales accelerated 9.3% for the same period.
Analytics forecasted that existing home sales will add 2.0% aтв make up 4.56 bn houses a year.
Technical Analysis:
Despite yesterday’s drawn game, the pair resumed its 3-day correctional reduction during today’s Asian session. The trading is still in the descending price channel, the lower boundary of which is placed near September 18 low of 1.3031 and near yesterday’s minimum of 1.2992. The upper limit of this channel is close to this month’ high of 1.3171.
Chinese statistics worsen the experts’ mood towards the euro. The level of support 1 is placed at yesterday’s target of 1.2985. From this level the pair can test 1.2961 level and then 1.2927. The most distant target is 1.2903 level for now.
For EUR/USD restoration, the pair has to fix above 1.3013 and then continue its growth towards 1.3048 area and after that the pair may try to hold the most serious bullish point for today – 1.3079.
20-day moving average is still indicating a descending trend and is under 60-day average line which is considered to be additional resistance level for the pair as it is placed at 1.3958.
Bollinger Bands are parallel to each other which is indicative of sideways market movements. However, taking into account the current situation, the market is gaining more volatility in the regard of EUR/USD. The trading is performed in the upper part of the channel and the medium line at 1.3035 acts as dynamic resistance level.
MACD indicator bounced back to zero point yesterday, but today reached the sell area again. However, we are not sure if these sells are strong enough to initiate downtrend movement on this currency pair. In order to continue the downtrend, the pair has to fix below 1.2985, the level which is of great importance for further market moves.
Key support and resistance levels for today:
Support levels: 1.2985, 1.2961, 1.2927
Resistance levels: 1.3013, 1.3048, 1.3079
60-day Moving Average (yellow line) - 1.3958
20-day Moving Average (green line) - 1.3035
