On Thursday, the US dollar strengthened slightly against the European currency amid weak fundamental data from the Eurozone, which confirmed one more time the nervousness of the situation, in which the world economy currently exists.
In early European session, EUR/USD fell to 1.2666, which attracted large investors, as a result, the European currency began to rise gradually versus the buck and by the opening of the North-American deals it attained a new day high of 1.2768.
Single European currency got support after successful auction on Ireland government bonds, which eased fear of investors even more.
However, the trades ended with the US currency advance, which edged up after a release of statistical data on initial jobless claims in the USA.
Fundamental review:
It should be said that the Germany’s consumer prices remained unchanged in August compared to July and rose by 1% in annual basis. These data matched forecast of economists, who had expected that the real index come in line with the preliminary reading.
The August reports indicate a slowdown in inflation growth pace compared to July. An increase was 0.3% m-o-m and 1.2% y-o-y.
The US initial jobless claims decreased more-than-expected on the week ended September 4. According to the US Labor Department, this reading went down by 27K, to 451K. Analysts had been waiting for a decline by only 2K.
Curiously enough, the US external trade deficit sharply shrank in July because of a significant increase in export of airplanes and a drop in common import. According to reports, the US external trade deficit tumbled by 14% to $42.78 bln from $49.76 bln in the previous month. Expert expectations for July had been $47 bln.
Technical analysis:
The market movement reversed to a downward price channel again, which we can construct from September 7. The upper limit goes through the yesterday’s high with the lower limit placed nearly the low of 1.2658 from September 8.
The area around 1.2646 keeps the pair off further decline. From this are the drop can continue to 1.2624 and 1.2588.
The EUR/USD advance is restricted by the first resistance level of 1.2701, from which an upward movement will last to 1.2738 and 1.2774.
Although Bollinger bands are slightly turned downwards, a general mid-term tendency stays sideways. Trading is held in the lower part of the channel and the mid band placed at 1.2697 area is dynamic resistance.
MACD indicator is in the purchase zone, though there are no considerable signs for the further pair falling.
Today’s recommendations:
Support levels: 1.2646, 1.2624, 1.2588.
Resistance levels: 1.2701, 1.2738, 1.2774.
Today it is advisable to buy the pair at a 1-hour timeframe closing above the level of 1.2706 with a target - T/P 1.2761 and S/L 1.2660.
It is possible to sell at the closing of a 1-hour timeframe below 1.2642 with a target – T/P 1.2553 and S/L 1.2678.