On Monday the euro got support after the comments of ECB president Jean-Claud Trichet, which strengthened the expectations of eurozone rate hike, thus moving aside concerns about the European debt.

The trading closed in favour of the European currency that grew 90 pips versus the dollar; volatility of the trading amounted to 139 pips.

Fundamental review:

As for fundamental data, it should be mentioned that consumer spending in this February advanced more than expected, which indicates higher income of population.

According to the data, consumer spending in February rose by 0.7% compared to January. This was mostly caused by personal income up 0.3%; however, savings growth rate declined to 5.8%.

Economists expected spending to advance in February by 0.6%, income – by 0.4%.

In his speech Trichet confirmed his position concerning interest rate. He mentioned that ECB price stability is highly expected and called everyone to improve control of eurozone xompetitiveness.

Technical analysis:

Trading is located in the price channel. Its lower limit touches yesterday’s low 1.4020 while it upper limit is located near March 25 and 28 highs – 1.4193 and 1.4115.

The first support level at the moment is the 1.4066 level; if it is broken the decline might continue to 1.4141 and further to 1.4019.

In case the growth is resumed the EUR/USD will have to pass the 1.4111 level; further upside movement might be targeted at 1.4141 and further to 1.4186.

The Bollinger Bands are parallel to each other and indicating high liquidity on the market. The trading is located in the upper part of the channel and the medium line at 1.4987 is providing dynamic support to the pair.

The MACD is near zero, which indicates uncertainty among buyers and sellers about further direction of the pair.

Today’s recommendations:

Support levels: 1.4066, 1.4042, 1.4019

Resistance levels: 1.4141, 1.4141, 1.4186

Today I recommend buying the pair in 1-hour timeframe after it closes above the 1.4089 with T/P 1.4149 and S/L 1.4075.

Sell the pair in 1-hour timeframe after it closes below the 1.4064 level with T/P 1.4018 and S/L 1.4078.