EURUSD’s analytical review with the forecast for March 17

The European currency rose against the US dollar during Tuesday’s deals, as Germany’s positive fundamental data and rating agencies statements exerted sufficient influence on large investors, having increased their risk appetite again. On the Asian session, the pair behaved itself quite calmly, gradually gaining ground. After the European speculators came to the market, the pair declined to the day low of 1.3686, however, the upward movement was refreshed thereafter. In the result, the local low of 1.3782 was fixed.

The trading day was closed in favor of the European currency, which climbed up versus the greenback by 98 points; the trading volatility amounted to 127 points.

Fundamental analysis:

The Eurozone CPI showed less positive dynamics in February than in January.

As Eurostat announced, the Eurozone consumer price index went up by 0.3% in February compared to the previous month and advanced by 0.9% over corresponding period of 2009.

The core consumer price index, leaving out price volatility for energy, food, alcohol and tobaccos, showed growth by 0.4% in February compared to January and by 0.8% compared to the last year.

The economic expectations index in Germany slid slightly in March, however, the dip turned out to be less than experts’ forecasts.

According to the released reports, the German ZEW economic expectations index dropped to 44.5 points in March versus 45.1 in February. Economists were waiting for the value of 43.0 points.

The euro got support after the information that S&P rating agency confirmed Greece rating at “BBB+/A-2” and removed it from its watch list had appeared in mass media. Nevertheless, the agency said the outlook for this country is negative.

Regarding the US fundamental statistics, it should be mentioned that the import prices in the USA decreased m-o-m in February. It happened mostly because of the fuel prices fall.

According to the US Labor Department, the US import prices moved down by 0.3% in February following the rise of 1.3% in January. January’s figure was revised to 1.4% from 1.3% reported initially. Analysts awaited the import price decline by 0.2%.

The US housing starts also shank in February. According to the US Commerce Department, seasonally adjusted housing starts tumbled by 5.9% in February compared to the preceding month and totaled to 575000 per year. Economists were predicting slashing by 4.7% m-o-m in February, to 563000 per year.

The FOMC remained the Federal funds rate at the level of 0.25%. This decision was made by nine votes against one. The Federal Open Market Committee declaration neither sustained the buck nor disserved it. The FRS mentioned an “extended period” for keeping the interest rate at low levels again, which surprised many specialists, who expected to hear about a reduction in liquidity on markets and tightening the US monetary policy.

Technical analysis:

The pair is continuing to grow in the upward channel from March 2, however, in short-term outlook there are preconditions for a descendant correction, as yesterday’s growth was held by 1.3797 area and the day highest point was recorded at 1.3782, which allows to draw a downward channel from the above-mentioned points. The low of 1.3639 from March 15 acts as a low of this channel.

If the pair breaks out the high of 1.3797, the ascendant movement will extend to 1.3841 level.

Yesterday, Bollinger bands reversed to the Sun side once again. Now, the trading is continuing in the upper zone of the bands. The middle band, placed at 1.3758, is on the pair’s declining way. The major key support level is situated here too.

MACD indicator is in the purchase zone, and any short-term fall of the pair can be considered as a good area for the growth renewal.

Today’s recommendations:

The support levels: 1.3760, 1.3738, 1.3703.

The resistance levels: 1.3797, 1.3841, 1.3881.

Buy the pair at 1-hour timeframe closing above the level of 1.3788 with the target — T/P 1.3835 and S/L 1.3767.

Sell the pair at 1-hour timeframe closing below the level of 1.3759 with the target – T/P 1.3723 and S/L 1.3773.

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