05.06.2014
Fundamental analysis
Despite the negative macroeconomic statistics from the Eurozone EUR/USD showed a growth of 0.2 %. The preliminary Eurozone CPI report came out worse than the forecast at 0.5% which once again confirms the presence of a deflationary threat. But the unemployment rate gave a little surprise, the total value amounted to 11.7%, which is 0.1 % better than the median of forecasts. The lowest unemployment recorded in Austria 4.9%, while in Greece and Spain is still a level of over 25%. The investors decided to take profit on short positions in anticipation of the ECB today's meeting.
GBP/USD "bulls" and "Bears" failed to reveal the winner yesterday. The construction sector PMI came below expectations that did not allow the "bulls" to consolidate above the resistance level 1.6773. It should also be noted that the figure drops 4 consecutive months that could indicate a possible peak in the growth phase and the subsequent decline.
After a small correction in the first half of the day the USD/JPY continued to rise again against the demand for risky assets. Investors are buying on pullbacks American and Japanese securities that pushes stocks up and supports the demand for the dollar/yen in the absence of important macroeconomic statistics.
Technical analysis
Euro (EUR)
General overview
The single European currency has grown up in yesterday's trading against the dollar. The euro still in a sideways and showed no new levels. However, under unfavorable for optimism statistics from the EU conditions, the fact that the euro strengthening was little understood and generally surprise event. Perhaps the market has already sufficient opened short positions while short-term investors took advantage of strong support to lock in profits.
The downward trend has moved into a side corridor between the levels 1.3645 - 1.3570. While the pair has been trading at the 1.3590 support level for five days. The short-term support retests are accompanied by the price rebounds up.
There is a confirmed and strong sell signal. The price is under the Cloud and it is under the Chinkou Span. The downtrend movement will be until the price is under the Kijun-Sen. The Kijun-Sen is directed horizontally. The Cloud is descending.
The MACD indicator is in negative territory. The histogram is close to the zero level.
Trading recommendations
If the pair keeps falling its targets are 1.3570 and 1.3520. The first target to grow is 1.3670. If today’s ECB meeting does not shock the market the downward movement continues.
Pound (GBP)
General overview
British pound was in the side trading against the dollar and closed the day at opening prices. The latest news marked the construction industry slowdown which disappointed the market. According to the report the Purchasing Managers Index (PMI) for the construction sector fell to 60.0 in May from 60.8 in April which was worse than the forecast growth to 61.2. There is a chance that the Bank of England would discuss rates raising at its next meeting and it will provoke the pound growth.
The price is finding the first support at 1.6730, the next one is at 1.6670. The price is finding the first resistance at 1.6800, the next one is at 1.6860.
The price is below the Cloud and above the Chinkou Span. The Kijun-Sen is directed downward. The Cloud is descending. The downward movement will be continued as long the price is under the Kijun-Sen.
The MACD histogram is in negative area. The indicator is decreasing showing the sell signals.
Trading recommendations
We are waiting for the second 1.6765 level retest. If the retest fails, we will see a a downward price bounce, back to the support level 1.6700.
Franc (CHF)
General overview
Swiss franc strengthened against the dollar. The published statistical supported the franc and against the background of zero inflation National Bank announces increase in its foreign exchange reserves.
According to the report submitted by the Federal Statistical Office the consumer prices level in March remained unchanged. This news was very positive amid predictions be expected to have lower price by 0.2%. The March index value was also a better indicator of February when prices fell by 0.1 %.
The price is finding the first support at 0.8950. The resistance is at 0.9000.
The price is above the Cloud and above Chinkou-Span, that’s a strong and confirmed buy signal. The Cloud is directed upwards. The upward movement remains until Kijun-Sen is under the price.
MACD is in the positive territory, the indicator is decreasing.
Trading recommendations
The pair is overbought. We believe it might correct a bit. The correctional targets are 0.8920 and 0.8880.
Yen (JPY)
General overview
The Japanese currency fell against the dollar again. Greenback growth against the yen was supported by the Japan stock market optimism where the Nikkei rose again and the sale of U.S. Treasury bonds to increase their profitability. It is possible that the market has remembered the Bank of Japan Governor H. Kuroda's statement that if there were risks to achieving the inflation target of 2.0%, then BoJ has ways to eliminate them through further monetary easing.
The buyers came to the resistance level 102.65 at decreasing volumes. The short-term level retest was accompanied by a small upper bound uplink 102.75 puncture which acts a further obstacle to the rising trend.
The price is finding the first support at 101.60, the next one is at 101.00. The price is finding the first resistance at 102.23, the next one is at 103.00.
There is a confirmed and strong buy signal. The price is above the Cloud and it is above the Chinkou Span. The uptrend movement will be until the price is above the Kijun-Sen. The Cloud is growing.
The MACD indicator is growing.
Trading recommendations
The growth main target is the strong resistance level 102.70. After consolidation above the pair might grow to 103.
