The European common currency remains under a moderate pressure, as the investors still see no signs of the increase and fear that the debt infection of Greece can contaminate other euro area countries.
During the European session the pair was growing as the GDP of Germany and the eurozone had demonstrated the uprise, though in the second part of the day, with the American investors entering the market, the US dollar began to strengthen again, when there arose new worries on the market as to long-term outlook for the eurozone economy.
The session closed in favor of the US dollar, which grew by 55 pips against the euro, the volatility equaled 140 pips.
Fundamental review:
The GDP in Germany in the 1st quarter of the current year seasonally adjusted has demonstrated the growth. According to the data of the statistics office Destatis, the GDP increased by 0,2% versus the 4th quarter 2009. The flash assessment was revised upwards. The experts, in their turn, forecasted the GDP to remain flat for the second month sequentially.
The GDP of the euro area recorded ascend in Q1, although such moderate pace of the increase cause doubts about the further economic recovery. Many analytics ask whether the recovery will be stable, taking into account the expenses shrinkage and he taxes’ enhancement.
In accordance with the data of the EU Eurostat, the GDP of the eurozone in Q1 grew by 0.2% after being unchanged in Q4 2009. The GDP climbed by 0.5% in Q1 year-on-year.
The observers awaited the increase of the eurozone GDP by 0.1% q-on-q and by 0.4% compared to the same period of the last year.
The industrial output of the euro area appeared slightly above the forecast. Reportedly, the industrial output of the eurozone added 1.3% and 6.9% as compared to the corresponding period of the previous year. The experts predicted the uprise by 1.0% and by 6.5% correspondingly.
Concerning the fundamental US statistics, I would like to mention that the federal budget deficit in April equaled $82,69 billion demonstrating one more time that the government expenses exceed the yield. Moreover, the growth is recorder for the 19th sequential month. The economists saw the deficit to be $45 billion. To compare, in April 2009 the budget deficit amounted $20,91 billion.
Technical analysis:
The pair is closed in a steady sideway channel with the limits of 1.2604 and 1.2748. Yesterday, in a short –term prospect it was possible to exit the downfalling price channel formed since May 5.
I would like to draw your attention to the developed wedge the lower border of which is possible to plot from the minimum of the current year and the upper line can be plotted form the maximum of May 11, 2010 - 1.2801.
The technical support and resistance levels remained the same. The pair gets the support from the level of 1.2604 as well. In case of the growth the first resistance will be around 1.2695, having broken which the euro will be able to get to 1.2748.
The Bollinger bands are placed parallel, which confirms the uncertainty on the market. The upper line of the bands acts as a dynamic resistance 1.2695. The lower band positioned in the area of 1.2604 supports the pair.
The MADC gradually leaves the negative zone nearing to the nil mark.
Recommendations for today:
Support levels: 1.2604, 1.2517, 1.2456.
Resistance levels: 1.2695, 1.2748, 1.2797.
Today I advise to buy the pair at closing above the level of 1.2674 with a target of T/P 1.2769 and S/L 1.2629
It is possible to sell at closing according to hour-timeframe below the level of 1.2595 with an aim – T/P 1.2518 and S/L 1.2641