A confident pair growth in the second part of the day on Thursday led to setting of a new local maximum of 1.2596, though many market participants were skeptical about this uprise since they are bounding it to a speculative character of trading. The most part of the European and first half of the American session EUR/USD spent in the sideways channel with clear boundaries of 1.2330-1.2442. However, later because of a weak market liquidity and bad fundamental statistics in the USA a growth of the European currency was noticed – in one hour by more than 174 pips. The session closed with a US dollar descend which yielded to the euro 46 pips in spite of the trading session volatility of above 174 points.
Fundamental review:
In Germany in April of the current year the growth of the PPI index was reported. According to the presented data PPI index which increased in March by 0.7% m-on-m, in April of the current year was able to show the growth by 0.8% on month and by 0.6% as compared to April of the previous year. On the average the experts were expecting the uprise only by 0.6%.
Consumer confidence in 16 countries of the eurozone in May decreased because of the problems in Greece and other overloaded by debts countries. According to released flash data consumer confidence in May declined by -17,5 versus -15 in April. This index for the EU countries has also fallen to -14,7 versus the forecast of -12,3.
The fundamental data of the USA were not able to give a needed support to the US dollar.
Thus, the number of initial jobless claims in the USA soared last week, reported on Thursday by the Department of Labor. According to its data the number of initial claims for the week May 9-15 grew by 2k to 471K whereas the economists were waiting for the decrease in jobless claims by 4K. the data for the prior week was adjusted upwards to 446K from 444K.
In spite of the growth of Pilly Fed activity the tempo of the vacancies appearance decreased. In accordance to the reported data the manufacturing PMI in Philadelphia
In May uprose to 21,4 points vs. 20,2 in April. This almost coincided with the forecasts of the experts.
Leading indicators index by Conference Board in April plunged. According to the released by Conference Board data the leading indicators index decreased by -0,1% after the growth by 1,3% in March. The economists forecasted the uprise of the index by 0.2% in April.
Technical analysis:
Breaking through a key resistance level of 1.2442, which has pressurized the pair price growth considerably let the euro increase to the base of the 26th figure and to break a short-term trend.
Currently, the movement is continuing in the uprising channel which has been formed on May 19, 2010. The lower border of the channel goes through the minimum of May 19 and the yesterday’s low which was fixed around 1.2294.
We also see that today the pair has almost reached the following resistance level which is around 1.2686, and getting through it will be possible to my mind only after a slight lowering correction to the area of 1.2485.
If the price decreases below 1.2442, the falling can be continued to the area of 1.2367 and 1.2269.
I want to underline that EUR/USD has crossed from the low to the high a 200 day EMA although the trading is likely to be held in the sideways channel with the levels 1.2442 and 1.2686.
The Bollinger bands continue denoting the uprising movement of the pair. The average line of the bands positioned near 1.2473, acts as a dynamic support.
The MACD indicator is in the buying zone and with any descend of the pair to the key levels I advise to open long positions.
Recommendations for today:
Support levels: 1.2602, 1.2529, 1.2442.
Resistance levels: 1.2686, 1.2748, 1.2799.
Today, I recommend to buy the pair during the closing according to an hour timeframe above the level of 1.2679 with a target of T/P 1.2805 and S/L 1.2599
Selling is favourable during the closing according to a pair’s closing hour timeframe below the level of 1.2555 with a target of T/P 1.2453 and S/L 1.2603