We expect a correction for EUR/USD | 23 February 2015

Euro

The euro tried to rise against the dollar on the sentiment formed by the Fed “minutes”, but soon it got under pressure. Nevertheless, the euro recovered its losses. According to the preliminary estimates the euro area manufacturing sector business activity amounted to 51.1 in February, compared with 51 in January and with the forecasted 51.5. The euro area services sector business activity index was 53.9 in February compared with 52.7 in January and with the forecasted 53.

The euro was sold again against the US dollar on the growth to the resistance near 1.1440-1.1460. The pair found the support at the level of 1.1340-1.1360.

The support levels are 1.1320-1.1340, and the resistance levels are 1.1440-1.1460.

MACD is in a neutral territory.

Trading recommendations

The overall picture remains the same: the pair is in the consolidation phase which can end the number of supports breakthrough and with a decrease towards 1.1100-1.1120. The resistance breakthrough around 1.1520-1.1540 will tell us about the readiness to develop a more large-scale correction.

Pound

The British pound spent the previous trading day in the narrow side corridor and closed with a slight growth very close to the opening prices. The January retail sales index came out -0.7% against the previous indicator data -0.1%, although we expected -0.1%. The month retail sales index for January came out worse than expected 0.3% against 0.2% when it was earlier expected -0.2%. The pair GBP/USD was not able to continue its growth and break through the resistance at the level of 1.5490-1.5510 and was forced to rebound to the support around 1.5330-1.5350. Then it tested the mark of 1.5415-1.5435. The pair was trading above the upward support line that maintains a positive outlook on its prospects.

The support levels: 1.5330-1.5350 and the resistance levels: 1.515-1.5435.

The MACD indicator is in a positive territory.

Trading recommendations

Bulls can test the resistance near the 55th figure and its breakthrough may lead to a growth towards 1.5560-1.5580. A decrease below the line and the loss of the support near 1.5260-1.5280 will call into question the pound ability to continue its recovery.

Yen

The Japanese yen fell against the dollar. Obviously, the emotions caused by the Fed minutes publication have been exhausted and everyday mood took once again the driver’s place. Japan published the February manufacturing sector business activity - the index fell to 51.5 from 52.2 when it was forecasted the growth up to 52.6. The pair dollar/yen rebounded from the support around 118.15-118.45 and rose to the level of 119.25-119.45. The consolidation phase is over, the pair is trading in the formed range, not being able to develop a movement in one or another direction.

The support levels: 117.95-118.15, and the resistance levels: 119.25-119.45.

The MACD indicator is in a neutral territory.

Trading recommendations

As long as it is trading above 117.95-118.15, the growth probability to the 120th figure and above it will remain high. The loss of this support will lead to a decrease towards the 117th figure.