The euro has lost some ground | 09 October 2014

Euro

The euro won back its position, being able to get out of a minimum of 2 years against the background of the dollar correction developing. The Europe Low data could not stop the euro rise. There is a production orders maximum reduction In Germany since the summer of 2009. The situation in the manufacturing sector will stabilize somewhat by the end of the year, followed by a possible slow growth, as the single currency decline is favorable for exports.

The pair found the support near the 25th figure and then began to grow. Its increase lasted until the rate came to the level of 1.2660. Here the pair began a consolidation. Its decrease is now limited by the support level of 1.2580. The support levels are 1.2560 - 1.2580, and the resistance levels are 1.2660 - 1.2680.

MACD is in a neutral territory.

Trading recommendations

If the euro is able to continue the consolidation above the level of 1.2560-1.2580 and break through the current resistance, we will expect the resistance test near the 27th figure. The loss of the support level of 1.2560-1.2580 will lead to the level of 1.2500 testing.

Pound

Today traders pay a special attention to the UK industrial production report. Both the industrial orders reduction and the 3-month PMI index decline point out to the data release that is worse than the consensus forecast. The GBP/USD fall seemed to be excessive, that’s why the pair correction was quite logical and expected. It found the support at the level of 1.6040, from which rebounded to the level of 1.6130. There was a decline, but soon the growth was resumed.

The support levels are 1.6020 - 1.6040, and the resistance levels are 1.6130 - 1.6150.

MACD is in a negative territory.

Trading recommendations

The resistance level of 1.6130 break will allow to test the level of 1.6200, the growth will jeopardize the resistance of 1.6300. The downward trend remains unchanged, but the pound increase may be used to open short positions.

Yen

The dollar/yen corrected near the 109th figure amid the empty macroeconomic calendar and the current levels are good for the long positions opening. The bullish trend for the dollar is still in force against the positive macroeconomic statistics. We expect the upward trend reinforcement on the US and Japan stock markets that favor all the same the US positive statistics as well as the low inflation expectations which are a traditionally bullish signal for the stock markets.

The week beginning was marked by the pair decrease where bears were able to retest the support level of 107.80. Its decrease was continued after the 109.40 rebound and the dollar/yen fell to 107.80. The support levels: 107.60-107.80, and the resistance levels: 108.20-108.40.

The MACD indicator is in a negative territory.

Trading recommendations

The pair decline is corrective. Its next target can be the level of 107.80. Its breakdown will lead to the 107.00-107.20 reduction.