EURUSD’s analytical review with the forecast for March 11

Yesterday, the European currency managed to overcome the bearish pressure, which was continuing during last few days, and showed the growth to the weekly high of 1.3678.


On the Asian session, the pair was sliding, however, after the positive fundamental reports on the Eurozone, the investors risk appetite increased and the pair rise was refreshed. The trading day closed with an advantage of the euro, which climbed by 55 points versus the US dollar, the trading volatility amounted to 134 points.


Fundamental review:

Germany’s Federal Statistical Office said the German consumer price index moved up by 0.4% in February compared to the previous month. Analysts were expecting the index to grow by only 0.2%.

The annual inflation of the CPI in February dropped to just 0.6% against 0.8% in January, and did not match the expectations of 0.4%.

The Federal Statistics of Germany also announced that seasonally adjusted trade balance surplus fell to EUR 8.7 billion in January against the surplus of EUR 16.6 billion in December. It should be mentioned that in annual basis, Germany’s surplus increased because in January 2009, surplus was EUR 7.1 billion. Export went up by 2.4% in January 2010, to EUR 67.9 billion. Import remained unchanged at the level of EUR 59.2 billion.

The industrial production in France demonstrated a significant growth in January compared to the prior month according to the National Statistics Office Insee. The industrial production boosted by 1.6% in January compared to the preceding month. Experts were expecting the production to rise, but by only 0.2%. December’s value was down revised to -0.2% versus -0.1%, reported initially.

The pair got support from both the stock and the commodity markets, as a slight growth in shares and steady dynamics of the commodity currencies improved the investors’ risk appetite outlook, thereby, sustaining the euro earlier in the day.

The euro rose versus the greenback, in spite of fears about the tension in such countries as Greece and Portugal. Worry reduction was caused by large sales of the Portuguese long-term government bonds. In some economists’ opinion, the successful issuance of the government bonds helped to disappear part of fears concerning the debt crisis in Europe.

Regarding the USA, we can notice that there was no any important statistics released again.

The MBA Mortgage Applications Index for the week ended March 6 unexpectedly surged by 0.5%. The Capacity Utilization index reached the level of 80.7% that week.

The wholesale inventories unexpectedly tumbled by 0.2% in January m-o-m against the experts’ forecast, who were waiting for the growth of 0.2%. I remind you that in December 2009, the wholesale inventories fell by 1.0%, revised from 0.8% initially estimated.

Technical analysis:

Yesterday’s movement of the pair had a clear ascendant character and by the trading day closing, the maximum came in line with the upper line of the downward price channel from March 3.

Also yesterday, the pair managed to come back within limits of the wider upward price channel from March 2, which begins from the level of 1.3436. The pair is supported by the level of 1.3609, in case of a breakout of which the downfall can reoccur, hitting the lower limit of the above-mentioned descendant channel, which lays at 1.3495.

The level of 1.3657 acts as a resistance, which have been limiting the growth by present moment. In case, if our trading instrument closes above 1.3691, the growth can be continued to the high of 1.3737 from March 3.

After yesterday’s upward reversal, Bollinger bands are slightly converging, speaking for the liquidity reduction in the market, which can lead to a sharp breakout upwards or downwards. The trading is held in the upper part of the channel, and the middle band, placed at 1.3637, acts as a support.

MACD is in the purchase area, and any correction can cause next wave of growth.

Today’s recommendations:

The support levels: 1.3609, 1.3550, 1.3495.

The resistance levels: 1.3657, 1.3691, 1.3737.

Buy the pair at 1-hour timeframe closing above the level of 1.3661 with the target — T/P 1.3708 and S/L 1.3639.

Sell the pair at 1-hour timeframe closing below the level of 1.3586 with the target — T/P 1.3546 and S/L 1.3601.

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