Yesterday, amid all fundamental datums the European currency lost part of its recently gained positions versus the U.S.dollar. The deals opened at 1.4407, but by the European session start-up the single currency had begun lowering steadily. The down-going motion was continuing almost till the end of the trading day, with a small position fixing near the support level of 1.4326. Altogether, the U.S.dollar rallied by 61 points.
The European Central Bank remained the key interest rate at 1%, coming in line with the players\' expectations, without promting any significant changes in the market. Italian industrial production contracted by 1.2%, compared to the last period with the reading of 0.00%. The German production orders demonstrated a confident growth by 4.50%. The experts were looking for increase by 0.6%.
The U.S. jobless claims showed a strong decrease coming in at 550.000, contracting by 38.000, compared to the last period. This was mostly due to the economic sentiment improvement in the USA.
The movement in favour of dollar was expected due to long term correction of single currency rising trend and its inability to overcome the level around the 45 big figure. From the technical aspect, the pair has stepped out of the up-going trend diapazon (of July 07, 2009) in a mid term, entering more acceptable trading channel in the range of 1.4326-1.4377 in a short term. Most likely that today\'s trading will take place within this zone. In a short term is also seen the pair\'s cross-cut with the 200-day moving average, which is clearly traced at 1-hour graph around 1.4297, it can be tested in case of EUR/USD lowering. The Bollinger bands demonstrate the liquidity rate slide down in the market, narrowing and standing in parrallel to each other.
The support levels can be considered around: 1.4326, 1.4276 with further lowering to 42 big figure.
The resistance stood at: 1.4377, 1.4446 with possible increase to 45 big figure.
In conclusion, worth noticing the following items concerning this trading week. Currently, is witnessed the sideward movement, which can be explained by the first trading week of August and serious fundamental data, released yesterday. Most likely that the number of major players and investors will increase only by the next Tuesday, and then will be determined our pair\'s direction.
Today will be issued the trade balance reports from Germany and France, and Italia\'s GDP adjustments. The Germany manufacturing output data will close the European week.
The U.S. non-farm employment adjustments are also expected, with lowering to 330.000. But don\'t be optimistic, as ADP data, released on Wednesday, came in much worse than the experts forecasts, that can affect the indicator mentioned above. Today will be announced the U.S. unemployment index, which is to show growth, according to the estimates.
Today recommend you to buy the pair at 1-hour timeframe closing above 1.4376 with the target – T/P 1.4446 and S/L 1.4381.40
Sell the pair at 1-hour timeframe closing below 1.4307 with the target – T/P 1.4207 and S/L 1.4377
Have a good trading day and nice weekend.
Regards,
Analyst: M.A.Magdalinin
