The European currency gradually bounces back from the deepest fall to new annual lows in the beginning of this week and during yesterday’s deals, it has managed to fix above the 21st figure.
From the first minutes of the European session the pair had been strongly demanded by risky speculators, as a result the growth from the closing level of previous day totaled to more than 102 points by the opening of the North American session.
The American investors were supported by the comments of the ECB President J.-C. Trichet, who said that the euro is a very safe currency.
The trades closed with the US dollar decrease by 124 points, the trading volatility amounted to 186 points.
Fundamental review:
According to reports of the Italian statistical office Istat, the economy of this country doubled in Q1. The Italian GDP increased by 0.4% in Q1 compared to Q4 of 2009. In accordance with preliminary estimates, the GBP growth totaled to 0.5%.
In comparison with the prior year, the GBP rose by 0.5% in Q1 against the preliminary estimate of 0.6%.
All market participants attention was focused on the ECB decision on the interest rate. Many participants were not hoping that the rate would be increased therefore, after it had been announced the market remained unchanged. As it is known, the European Central Bank left key interest rate at the level of 1% on Thursday.
The euro was sustained by the ECB raise of its growth forecast of economic activity in the Eurozone for this year, but at the same time it lowered the forecast for 2011. During the appointed press conference the ECB President J.-C. Trichet declared that the ECB analysts are expecting the GDP growth by 0.7-1.3% in this year and the average prediction is the rise of 1.0%. the previous average growth forecast was 0.8%.
The European currency responded positively to the Chinese export, which went up by 50% and also the Japanese GDP upsurge in Q1, which was revised upwards. One more positive thing was selling the Spanish bonds by auction, which in spite of all problems of this nation was held very successfully.
Concerning the US fundamental statistics, it should be noted that the US external trade deficit moved up in April despite the experts expectations. According to the US Commerce Department report, the external trade deficit rose by 0.6% to $40.29 bln. in April from $40.05 bln. in March. Economists were predicting the growth to $40.15 bln.
The US initial jobless claims slightly went down in the week from 30 May to 5 June. According to the report, the initial jobless claims decreased by 3000 to 456000, which came in line with analysts’ expectations. The preceding week reading was revised upwards to 459000 from 453000.
Technical analysis:
The uptrend keeps on. During today’s Asian deals, the upper limit of the rising price channel from 7 May 2010 was tested.
We should pay attention to that in the result of yesterday’s growth, the European Single currency has broken 100 day exponential moving average, which lies at 1.2088 and now it supports the pair on the way to decline in short-term outlook.
If the downtrend refreshes, the pair will be supported by the levels of 1.2072 and 1.2008.
If the pair moves up further, after the breach of 1.2146, the uptrend can last to 1.2180 and then it can test 1.2225.
Bollinger bands are up-directed, but the trading is driven in the upper part of the channel, which speaks for a possible correction of the pair in the first part of the day. There are not much efforts left, as the market liquidity gradually drops. Now, the mid band supports EUR/USD, which lies at 1.2097.
Today is Friday, and large players after two days growth can start to level off their positions ahead weekend.
MACD is in the purchase area, but it is gradually lowering to zero mark that can indicate the pair entry to sideways diapason of movement.
Today’s recommendations:
Support levels: 1.2072, 1.2008, 1.1954.
Resistance levels: 1.2146, 1.2180, 1.2225.
Today it is advisable to buy the pair at 1-hour timeframe closing above the level of 1.2148 with a target - T/P 1.2202 and S/L 1.2115.
It is possible to sell at the closing of 1-hour timeframe below 1.2089 with a target – T/P 1.2036 and S/L 1.2121.