A sharp growth of the European currency yesterday afternoon was directly related to investors’ risk appetite rising, as the positive US industrial sector data and improvement of the situation on the labor market favorably influenced on the market participants. At the European session, the euro decline was caused by worries of continuous tacking about uncertainty of the help program to Greece and quotations decrease at the raw commodity market, as a result, the session’s low was recorded at 1.3457.
The trading day closed with another increase of the euro against the US dollar, which amounted 75 points. The trading volatility was marked with 129 points.
Fundamental analysis:
The manufacturing purchasing managers’ index in Eurozone climbed to 56.6 in March against expert forecasts the PMI to remain unchanged at the level of 56.3 of February.
Regarding single the Eurozone members, I will note that the Italian manufacturing PMI advanced to 53.7 in March versus the forecast of 52.6.
The French manufacturing PMI boosted to 56.5 in March against 56.3 predicted by economists. The German manufacturing PMI reached the record high of 60.2 versus analysts’ expectations, who were waiting for the growth of only 59.6.
The US solid fundamental statistics brought back investors confidence in the near recovery of the world economy.
The first-time claims for unemployment benefits in the USA showed another modest decrease in the week ended March 27, speaking for the gradual normalization of the labor market situation.
According to a report released by the Labor Department on Thursday, the initial claims dropped by 6K, to 439K, while experts were expecting a falling by only 2K. The reading of the previous week was revised upwards to 445K from 442K.
Meanwhile, the continues jobless claims tumbled to December of 2008 level.
The construction spending fell again in February, as the US Commerce Department said in its report. In February, the seasonally adjusted construction spending reduced by 1.3%, to $846.23 billion per year, while January’s spending plunged by 1.4% (revised reading) versus 0.6% reported initially.
The US industrial sector activity showed a record growth in March. The SMI industrial index surged to 59.6 in March against 56.5 in February. Economists were predicting the index to be at 57.0.
Technical analysis:
From technical viewpoint, there were no important changes. The trading is continuing in the ascendant price channel from March 25, and just a decline below 1.3484 can make the pair to feel the bearish pressure again.
The first resistance level is at 1.3583, which during yesterday’s trading was restraining the pair upturn. After a breakout of this level, the pair can move up to 1.3636.
A bottom-up crossing the 100 day moving average with the 200 day moving average speaks for the upward movement renewing.
Bollinger bands point out good liquidity on the market, however, the trading is held in the upper zone of the channel, and perhaps, for the growth refreshment the pair will have to go down to 1.3514, where it will be able to get new support and an impulse for the upward movement continuation.
MACD is placed in the purchasing area, and any the pair lowering should be considered as a potential area for opening long positions.
Today’s recommendations:
Support levels: 1.3535, 1.3484, 1.3435.
Resistance levels: 1.3583, 1.3636, 1.3695.
Today, buy the pair at the closing time of 1-hour timeframe above the level of 1.3588 with the target of T/P 1.3631 and S/L 1.3558.
It is possible to sell at the closing of 1-hour timeframe below 1.3558 targeted to T/P 1.3514 and S/L 1.3581.