EURUSD’s analytical review with the forecast for March 18

The investors’ unwillingness to risk and open long positions on the euro against the US dollar at the bottom of the 38th figure provoked a slight decline of the pair yesterday afternoon, having allowed recording the lowest level at 1.3726 area. Earlier yesterday, the European currency managed to strengthen to the new high at 1.3817, but, thereafter, the weak fundamental data on the Eurozone and the fixation of long positions brought the pair back to the opening level.

During the North-American session, the trading instrument fall was continuing, despite the US negative macroeconomic statistics.

The trading day closed in favor of the buck, which rose versus the euro by 27 pips. The trading volatility totaled to 91 points.

Fundamental analysis:

The Eurozone construction production dropped by 2.2% in January compared to December 2009 and lowered by 12.5% y-o-y.

Labor costs in Eurozone increased by 2.2% in Q4, however, the readings did not match experts’ forecasts, who were expecting the growth by 2.7%.

The US producer price index seasonally adjusted tumbled by 0.6% in February 2010, while in January this indicator showed the growth of 1.4%. January’s reading was not revised.

The core producer price index, excluding volatile prices for energy and food, boosted by 0.1% in February following January’s upsurge of 0.3%. Economists predicted the producer prices to fall by 0.3%.

The MBA’s mortgage claims index for the week ended March 13 slid by 1.9%. The US capacity utilization for the week to March 13 climbed to 80.6%, which signals about this sector stability.

Today’s slump of the pair on the early Asian deals directly related to news from Greece. As it has become known, Greece is likely to ask for financial aid from the IMF. In the result, these reports gave rise to fears that the IMF will make Greece to take severe measures in its economy.

Technical analysis:

From technical view, the pair approached to quite serious levels. After testing them on yesterday’s trading session, a correctional movement has started, as an important enough resistance level is placed here. The overcoming this level can lead to the pair growth to 1.3841 and 1.3881.

The current correction is reasonable and do not constitute a serious menace for tendency changing. Short-term trading is driven in the upper channel from March 11 and 1.3656 area is a support, repulsing from which the pair growth can renew.


The first key resistance is at 1.3726, overcoming which the movement can be continued to 1.3773.

Middle-term tendency also is pointing put a growth and the trading is in the channel from March 2.

Bollinger bands have been showing a descendant movement during today’s trading, however, it should be noticed that the trading is conducted in the lower zone of the bands and the pair growth refreshing can deflect short-term correction. The dynamic resistance is the middle band, placed at 1.3735.

MACD signals about the pair lowering, it is situated in the sales area, however, for bears we recommend to open orders just in case a slight upward movement to 1.3727.

Today’s recommendations:

The support levels: 1.3657, 1.3613, 1.3550.

The resistance levels: 1.3726, 1.3773, 1.3816.

Buy the pair at 1-hour timeframe closing above the level of 1.3727 with the target — T/P 1.3786 and S/L 1.3700.

Sell the pair at 1-hour timeframe closing below the level of 1.3666 with the target – T/P 1.3594 and S/L 1.3709.

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