25, February 2013

EUR/USD (a 4-hour chart)

EUR/USD (a 4-hour chart)

The disappointing figures of eurozone PMI weakened the market. The euro fell below 1.31 dollar for the first time after the weak euro zone manufacturing data reinforced expectations of a potential reduction rates by the European Central Bank.

The data continues to show significant differences between regions of the two largest economies. Germany shows a continued growth, while the French business activity is declined at the fastest pace in four years. For the region as a whole, PMI fell to 47.3 from 48.6 this month. That fact proves that the region has reduced the fourth quarter in a roll. Probably it is connected with the growth of EUR/JPY as investors were selling Japan currency for a few months.

The pair met support at 1.3170. This line can give a respite from further decline, while the euro is trying to find its own way. The next support is at 1.3130. If going up the pair meets the resistance at 1.3240 which protects the resistance at 1.3280.
Current range of trading is 1.3170 - 1.3240.

Short term forecast – the trend is still down warded with a steady bearish dynamics.

EUR/ SD ratio continues to show movement in the direction of long positions. It is not currently reflected in the movement of the currency pair, as the euro fell against the U.S. dollar in trading on Friday. But the shift in the ratio may be a sign that we will see a correction of the current downward movement of the pair.