The most part of the trading day rolled on in the price channel of 1.3885-1.3925. It was connected with the «G8» Summit, which started up yesterday in Italy. At the European trade opening the EUR/USD currency pair tested the resistance level of 1.3925, after that decreased to the support around 1.3885. At the American session opening the pair fell below 1.3885, and set a new local minimum at 1.3832, where stood another strong support level. Yesterday, by the deals end the European currency managed to recoup the part of losses closing at 1.3874. Totally, the U.S. dollar gained 45 points versus Euro. The volatility rate amounted to 105 points.
The pair\'s rise from the morning lows was due to the oil market. According to the yesterday\'s announcements, the Nigeria rebels exploded two more oil pipelines of Royal Dutch Shell and Agip, that enabled the single currency rally slightly against the greenback.
The Eurozone GDP data came out without surprises, which according to the experts\' forecasts showed a decline by -2.50%. Due to that the figure came in line with expectations, there was not witnessed a panic in the market. A piece of positive mood was brought to the «eurobulls» from the Germany industrial production report, which showed growth by 3.70%, better than the economists estimates of 0.60%. The previous reading demonstrated a negative dynamics. The production increase was not a surprize too, as the manufacture orders in Germany also showed a sharp upturn.
Yesterday, the Head of the World Bank Robert Zellik made a statement noting that the dollar\'s position as the world\'s reserve currency is not under the threat, but at the same time Washington should give ear to the concerns about continuing and growing budget deficit. This confirms one more time that there is no point in relying on the bulls market with Euro, as now there is no alternative for dollar.
Concerning the U.S. fundamental data, worth pointing out the MBA refinance index, which rose by 10.90%, crude oil inventories fell by 2.90 million barrels These findings did not change the investors\' mood, that led to the European currency drop.
The previous day at the technical pattern was once again tested the level of 1.3885. The pair succeeded to move down to 1.3823, but it did not manage to fix there for a long time, as the downturn was stimulated by a chain of bulls purchases allowing to return to the 39 big figure. Now let us try to look at the market as the bears and describe the downward channel from July 1. Is seen to be that the next resistance level is around 1.3962, on its way there is a resistance at 1.3925, including the 200-day exponential moving average at 1.3971 at 1-hour timeframe chat.
In conclusion, I would like to add that yesterday the European Union released its plans regarding a radical correction of estimation the banks\' capital adequacy. In other words, these changes will consist in that during the economic growth period there will be more requirements for the banks, during the recession periods — less.
Today will be issued the German consumer price index which is to come in line with the last period indicator and tick up by 0.40%. Than is expected the German trade balance and the ECB report for month.
Finally, the USA will bring a positive fundamental data this week. Today will be published the jobless claims report. The experts are looking for a decrease to 610.000. Then we will see the wholesale reserves datums, which may tick down by 1.00%.
Today I recommend you to buy the pair at a 1-hour time frame closing above 1.3916 with a target – T/P 1.3967 and S/L 1.3880.
Sell the pair at a 1-hour time frame closing below 1.3854 with a target – T/P 1.3804 and S/L 1.3889.
Have a good trade and positive working mood
Analyst: M.A. Magdalinin
