On Wednesday, the European currency against the US dollar traded in the narrow price diapason, having not showed evident market dynamics and direction.
On the early European session the pair had reached an 11-week high around 1.3041 area, but after it sharply declined amid profit fixation. The mark of 1.30 was not hit.
During the North-American deals the pair behavior was also uncertain, it continued to trade in the range of 1.2968 – 1.3018.
The trading day closed with the greenback advantage, which rose versus the euro by 5 pips, the volatility amounted to 75 points.
Fundamental review:
The German Preliminary Consumer Price Index demonstrates a moderate growth in July. According to the Federal Statistical office Destatis, Germany’s Consumer Price Index increased by 0.2% compared to June and edged up by 1.1% over the previous July. Analysts had been expecting 0.3% growth m-o-m and 1.2% increase y-o-y.
However, the Harmonized CPI matched expert forecasts, having gone up by 0.3% to June and by 1.2% to the prior year. The consumer prices in Saxony boosted by 0.2% in July m-o-m and by 1.2% y-o-y. Experts had been predicted a growth of 0.3%.
Concerning the quarterly report of the ECB, in Q2 the Eurozone banks continued to tighten credit standards. In accord with survey, a number of banks announced the credit standards tightening increased to 11% in Q2 from 3% in Q1. It proves one more time that the banking regulators become more careful.
Regarding the US fundamental statistics, it should be mentioned that the US durable goods orders shrank in June. It was the second sequential drop. According to data, the orders went down by 1% in June and totaled to $190.5 bln., while economists had been forecasting an upsurge of 1.1%.
The Beige book report was released yesterday. It shows that the US economy has been growing moderately in June and the first part of July. It sustains the worries that recovery is being played out. The report said economic conditions continue to improve, but the recovery pace remains modest. The retail sales rose but just slightly. The real estate market and the construction sector stay weak.
Technical analysis:
The pair is trading in a small upward price channel from July 27, however, the general tendency has been indicating a sideways motion for several days. The current diapason is 1.2954 – 1.3043.
EUR/USD had been trying to break out the 30th figure for several times and fixate in this area, which only led to the pair decline to the 29th figure bottom. It points one more time at that for more significant growth a correction is necessary.
For the further growth the trading instrument needs to break through above the level of 1.3043 and to close in that area. Only in this case the rising movement lasts to 1.3111 area.
Bollinger bands are parallel indicating the low market volatility. The trading is held in the upper part of the channel and the middle band placed at 1.2998 area is dynamic support.
MACD is positioned around zero mark testifying to the limited growth of the pair in short-term outlook.
Today’s recommendations:
Support levels: 1.2988, 1.2965, 1.2918.
Resistance levels: 1.3016, 1.3045, 1.3063.
Today it is advisable to buy the pair at 1-hour timeframe closing above the level of 1.3022 with a target - T/P 1.3074 and S/L 1.2992.
It is possible to sell at the closing of 1-hour timeframe below 1.2971 with a target – T/P 1.2917 and S/L 1.2998.
Performed by Maxim Magdalinin, Analytical expert
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