Analytical review of the EUR/USD currency pair with the forecast for Wednesday (Jan 27)

After the Euro lowering against the US dollar at the early Asian session, to the opening of the European trades the pair began to recover its positions gradually, due to positive dynamics of the Euro-zone fundamental data.

The most part of the first half of the day the EUR/USD currency pair was trading in a sideway channel of 1.4071-1.4102, when, with the entering of the American investors into the market, the pair continued its decline, as more positive US macroeconomic statistics caused new purchases of the greenback.

The day\'s low was fixed at 1.4039. Tuesday\'s trading session was closed with a solid advance of the US dollar of 74 points. The trading volatility amounted to 135 pips.

Fundamental review:

The European currency slumped versus the American dollar during the early Asian trades, because of the fact that S&P rating agency initially reduced the rating of Dubai Holding Commercial Operations Group from BB+ to B, then the agency canceled it entirely, making a note of its unreliability and low level of available financial information.

When IFO business climate index data in Germany was released, the pair started to recover its positions gradually.

So, the German IFO business climate index in January grew to 95.8. Analysts in their turn predicted the rising of this index to 95.1. IFO - Current Assessment index in January increased to 91.2 from the expectations of 91.3. IFO - Expectations index in January rose beyond 100 points and was marked at 100.6 versus the predictions of 99.1.

More than positive data on the US consumer confidence index, which was published in the second half of the day yesterday, added the assurance to investors and caused another wave of the greenback\'s purchases versus the Common European Currency.

According to the received figures, the US consumer confidence index for January was revised towards the growth to 55.9 from 53.6 in December, 2009. Analysts were waiting for this indicator to upturn only to 53.7.

Richmond Fed Manufacturing index in the current year turned out to be at -2, compared to the value of -4 in December, 2009.

After the publication of the mentioned above statistics, the pair slumped to the area of 1.4052, from which it was reviving step by step to the end of the trading day.

Technical analysis:

At yesterday\'s trades the EUR/USD pair changed its direction and currently the trading is conducting in another downward channel, the high of which was reached at 1.4190 on Jan, 25 and the second low was fixed near 1.4039. The next solid support level is the area of 1.4026, breaking out of which, the pair could drop to the 39th figure.

The exponential moving averages are continuing to point to the bearish motion of the pair, do not showing any signs of reversal in the mid – term outlook.

Bollinger bands, after yesterday\'s lateral movement, during today\'s trades are starting a gradual turn down and the trading is conducting in the bottom of bands at the moment. the middle line, located near 1.4075, is the dynamic resistance level.

MACD indicator worked out the pair\'s decrease entirely during yesterday\'s session and it is still in the negative zone. Any pair\'s advance may cause a new wave of the Euro\'s purchases versus the US dollar.

Today\'s recommendations:

The support levels: 1.4026, 1.4006, 1.3952.
The resistance levels: 1.4093, 1.4131, 1.4169.

Today I recommend to buy the pair at 1 - hour timeframe closing above the level of 1.4095 with the target — T/P 1.4136 and S/L 1.4069.

Sell the pair at 1 - hour timeframe closing below the level of 1.4048 with the target — T/P 1.3983 and S/L 1.4080.

Best regards,
Analyst: M. Magdalinin.