 The EUR/USD pair traded very ambiguously, but to the end of the trading week the bears managed to take matters into their own hands and to draw a bears' candle on a weekly diagram, which more likely to pacify bulls' fervor a little. As we could see at the opening of the Asian trading session the currency pair EUR/USD didn't make any reasons for increasing or declining. The European session had a bit of clarity in the overall picture and made it possible for the pair to drop to 1.3515, testing the support level at 1.3525. Then, as the pendulum, the pair bounced back sharply to the level of 1.3614, and as we can suggest, it happened against the background of a fixed profit of short positions. Unfortunately, it was impossible to hold near the 36th figure, and the trades closed at 1.3495. Totally, the dollar played back from the Euro 138 points at the trading on Friday 15.05.09 (open 1.3633, close 1.3495). The volatility rate amounted 186 points (high 1.3648, low 1.3462). Now let's talk a little about that which caused such price variations in the Forex market for currency pair EUR/USD on Friday. As we could see, before the released GDP data for Germany and the Eurozone, it was an anxiety among the bulls on the Euro as they were waiting for performance degradation. As a result, GDP data for Germany and the Eurozone showed more slightly reduction, as it was forecasted by experts. Germany — a decline on 3,8% in a quarterly basis, and on 6,7% in an annual basis; the Eurozone — minus 2,5% and minus 4?6% respectively. After these negative data, the Euro started to lose the ground sharply, which led the pair to the new local lows. Speaking about inflation expectations in the Eurozone, the rose for 0,4% in April also did not inspire confidence for the bulls' on the Euro. U. S. fundamental data, which came out a little bit later, showed, in total, the positive dynamics. For example, the net volume of purchases of the long — term American bonds by foreign investors/ Net Long-term TIC Flows, was higher than the forecast at 33.3V and amounted 55.8V. The industrial index Empire Manufacturing showed a decline by minus 4.6, but it was better, than forecasted level of minus 12, which was beneficial to the dollar. The overall consumer price index on a monthly basis remained unchanged at the level 0.0%, as it was predicted by experts, however, compared to last year the decline by 0,7% was recorded, which reduces the risks of inflation. And of course, it is worth mentioning, that the consumer confidence index, University of Michigan, which was even higher, than the positive forecasts of 67.0, and went out at 67.9. This index depicts the picture of how Americans are beginning to spend their money very well, and therefore suggests, that they are still have the money and that the money are spent with great pleasure. Speaking about the technical picture, the concerned trading instrument returned to the area of the uptrend channel from 24.04.09, and currently is trading in the upper part of it, testing the support level at 1.3468. A steady decline of the pair below the 35th figure seriously suggests to think over a protracted correction of the dollar against the Euro. I want to draw your attention to the float market condition, which was dominated during the whole last week. However, this corridor had been extending for the trades, now showing the new maximum levels, then dropping to the new local minimum levels, giving no peace either to the bears or to the bulls. Currently, the pair is trading below the 200 daily exponential moving average, and only at the closing above this level you can gradually consider the variants for purchases. You can choose from the support levels at 1.3424, 1.3386, 1.3296, the resistance levels are located at 1.3486, 1.3525, 1.3562, the breaking through these levels will open us the way to the level of 1.3663. You have to look at today's fundamental data released by the Secretary of the Treasury Timothy Geithner, the consumer confidence index in the housing sector, which also are to be released today. Today's recommendations (short-term tradings):
You can buy the pair at the closing value of 1-hour timeframe above the level of 1.3500 with a target — T/P 1.3525 — 1.3562 and S/L 1.3461. You can sell at the closing value of 1-hour timeframe below the level 1.3420, with the target - T/P 1.3383-1.3334, and S/L 1.3459.
Analyst: M. A. Magdalinin.
e-mail: forexmax@rambler.ru
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