The European currency extended its decrease against the US dollar on Monday which had been started on Friday\'s trades. At the Asian trading session opening and almost until the second part of American trades the US dollar strengthened by more than 100 points against the Euro. Only after that on the back of the profit taking and a positive mood getting from the US fundamental statistics, the pair pulled round to the basement of 41st figure, closed near the level of 1.4079. Totally, the Euro dropped against the US dollar by 110 points. The volatility rate also was marked at sufficiently high level.
One of the first assumptions for declining were the Eurozone Trade Balance data which dropped to 1.00B, compared to experts forecast in growth by 0.30B against the figures of the previous period at 1.10B. I remind you, that this indicator determines the seasonally adjusted difference between imported and exported goods and services. Considering that there were no released statistics from the Eurozone the major investors had nothing else than to transfer their assets into less risky capital, allowing the US dollar to test the next local minimum.
During the European trading session the stock indicies were marked off by new minimum levels which only enhanced succeeding the pressure upon the Euro.
The published data on the Empire State manufacturing index has exceeded all experts expectations, came to the level of 12.10, compared to the forecast growth only to 2.80. I remind you, that the last period was marked by declining to -0.60.
In general, the limelight was rooted to Net Foreign Security Purchases (TIC), as it is this index determines a monthly difference between American purchases of foreign securities and foreign purchases of American securities, expressed in millions of dollars. Net Foreign Security Purchases by foreign investors (JUN) came to $123.6B, but net purchases by american investors only amounted to $32.9B in June. The whole activities balance showed us the increase to $90.7B, compared to two — months decline to negative quantity for the past period at -16.40B. This indicator meaning says us about an ascending demand for american securities and thereafter about more optimistic investors outlooks for the moment.
The fundamental data was done with NAHB Housing Market Index publication which turned to be in line with investors forecasts of 18.0.
Yesterday\'s day was not done without surprises in the bank sector. As it turned out, Colonial Banc Group (USA) brought to an end its existence, it dealt with credit financing in the range of estate property. This was one of the largest bank bankruptcy in the US economy for 2009.
The technical picture for the European currency remains to be not favorable. Breaking through the support level, made up by the upward price channel line from May,18 may negatively echo the further Euro motion. The pair also broke through the 41st figure, fixed the minimum level near 1.4043. The only factor that limited the fall of the European currency was the correction Fibo level at 61.8, which is located near the area of 1.4967. Currently, the pair is showing the correctional growth, testing the zone of 1.4139 where 50.0% Fibo level is located.
Bollinger bands are in parallel to each other and their levels can be perceived as dynamic support and resistance levels. The whole local support levels are:1.4066, 1.4043, 1.4006.
The resistance levels are 1.4139, 1.4178, 1.4202 (200 day exponential moving average).
Today I recommend to buy the pair at the closing 1-hour timeframe above the level of 1.4133 with the target — T/P 1.4182 and s/L 1.4080.
Sell the pair at the closing 1-hour timeframe below the level of 1.4081 with the target T/P 1.4021 and S/L 1.4125.
Best regards,
Analyst: M. Magdalinin.
