EUR/USDs analytical review with a forecast for April 1

On Wednesday, the European currency strengthened by more than 90 points due to fundamental statistics, investors’ risk appetite rising and reaching important key technical levels.

At the Asian deals, a slight correctional movement was observed after Tuesday’s boost, but by the opening the European markets, the pair growth was renewed, which by the end of the day led to the new local high of 1.3544. At the North-American session, the employment reports affected the US dollar, as a result the upward movement continued. The day closed with the euro advantage of 95 points. The trading volatility amounted to 163 points.

Fundamental data:

The French producer price index showed a significant increase in February, compared to February 2009, almost remained unchanged month-over-month. 

According to the French National Statistical Office Insee, the PPI grew by 0.1% in February compared to January and by 1% compared to the previous year. Economists were expecting the index growth of 0.1% in monthly basis and of 1.1% year-over-year.

The budget deficit in France surged in 2009 to 7.5% of the GDP against 3.3% of the GDP in 2008. Such sharp deficit advance directly associated with carrying out the economy stimulation program.

Italy’s producer prices went up by 0.4% in February in annual basis, while in January 2009 this index dropped by 0.3%. The Italian PPI increased by 0.2% compared to January 2010 after falling of 0.6% in January. Experts were waiting the PPI to gain by 0.3% y-o-y and remain unchanged over the preceding month.

Germany’s labor market continued to recover in March. As the Federal Labor Office of Germany said, the recorded unemployment rate tumbled by 31K, to 3568 million, while economists were predicting the growth of 10K. The seasonally adjusted unemployment rate fell to 8.0% following February increase of 8.1%.

The Eurozone unemployment rate rose to the highest level in February. According to the EU Statistics Office Eurostat, the Eurozone unemployment rate climbed to 10.0% in February versus 9.9% of previous three months. It matched forecasts of analysts.

The Eurozone consumer price index gained by 1.5% in March compared to the prior year. I remind you that in February the Eurozone inflation ticked up by 0.9%. Experts were expecting the CPI to grow by 1.2% in March.

The US fundamental statistics put substantial pressure on the buck afternoon.

The US private sector employment noticeably reduced in March, while economists were predicting a growth. The US private sector employment decreased by 23000 in March. Experts’ forecast was the increase of 50000. In February, this reading shrank by 24000 against 20000 reported initially.

Chicago PMI fell to 58.8 in March versus the forecast of 61.0. February reading was 62.6.

The industrial orders climbed by 0.6% in February, which turned out a shade better forecasts of 0.5%.

The MBA mortgage claims index moved up by 1.3% on the week ended March 27.

Technical analysis:

The pair continues trading in the upward channel, which can be built from March 26, with today’s high of 1.3557. For next breakthrough upwards, it is necessary to overcome the key resistance level of 1.3583, which will clear the way to 1.3635-95.

In case of a correctional decline, which is more likely, as the trading is driven nearly the upper limit of the ascendant channel, the levels of 1.3484 – 1.3435 will give support.

I note that the trading is continuing above the 100 day and 200 day moving averages that speaks for the pair growth in mid-term outlook.

Bollinger bands have been converging by this moment, testifying to the liquidity reduction on the market. The trading is held in the lower zone of the bands that gives an opportunity of the further rising in short-term outlook.

Although many things indicate a growth, MACD shows a divergence after today’s strong increase of the pair at the Asian session. It make think about a possible sideways movement of the pair during today’s deals, or about the correctional decline refreshment before the growth continuation.

Today’s recommendations:
Support levels: 1.3484, 1.3435, 1.3384.
Resistance levels: 1.3536, 1.3583, 1.3635.

Today, buy the pair at the closing time of 1-hour timeframe above the level of 1.3560 with the target of T/P 1.3622 and S/L 1.3515.
It is possible to sell at the closing of 1-hour timeframe below 1.3474 targeted to T/P 1.3408 and S/L 1.3515.

More analysis at