A moderate rally of the European currency yesterday was mostly owing to the Eurozone fundamental statistics and also to a positive mood of the major players. The trading opened at 1.4211. The growth of Euro was witnessed in the Asian trading session and thereafter in the European deals. The level of 1.4248 was overcame easily, that allowed the pair increase to 1.4280 and then fix a session high at 1.4329. Totally, the European currency rose by 103 points against the U.S.dollar, the volatility rate was rather high. Only by the middle of the European deals the U.S. dollar gave a slight resistance lowering the pair to 1.4249. This decline was considered by the players as correctional promting another Euro purchase wave versus the American currency.
What show the fundamentals. In the morning session was released the German and French GDP data. Germany reported an improvement by 0.30%, compared to the experts forecasts of -0.30% drop. France also demonstrated an uptick of GDP by 0.30%, consensus -0.50% decrease. In addition to this, the Eurozone GDP figures came in the negative zone at -0.10%, but this contraction was lower than expected.
The U.S. microeconomic statistics turned out to be opposite the European one. The retail sales index fell by 0.60% not coming in line with the analysts estimates predicting an increase by 0.20%. The retail sales showed a downturn of 0.10% after 4-month advancement versus the growth expectations of 0.50%. This fall was considered as correctional, as 4-month confident upward movement is more important in a mid term than a slight lowering in the last period. The jobless claims data also rose slightly compared to the last period coming at 558.000. The last period downside estimate was at 554.000. This indicator has been moving sidewards during the whole last month and the part of August. The statistics was over with the import price index showing a decline by 0.70%, compared to the last period reading.
The technical pattern. This week the single currency had been recovering after the previous week low. By the trades closing on Thursday the Euro had rebounded a significant part of losses. The whole trading range is in the price channel 1.4249- 1.4301, where stood the correctional Fibo level 23.6% appearing as the restraining factor of the further growth. The pair also managed to break through the 200-day moving average running around 1.4236 and close above it, signaling a possible rising trend continuation in a short term.
The Bollinger bands are parrellel to each other, and their bounds can be considered as dynamic support and resistance levels.
Let us be non-judgemental concerning the upturn formed recently. Today we may see a slight correction, which can be promted by the long positions fixation of the major players and investors.
Remember that today\'s economic calendar is full of different statistical data, which must be brought to notice.
I recommend to buy the pair at 1-hour timeframe closing above 1.4284 with the target – T/P 1.4329 and S/L 1.4245
Sell the pair at 1-hour timeframe closing below 1.4246 with the target – T/P 1.4180 and S/L 1.4284.
Bets regards,
Analyst: M.A.Magdalinin
