The Euro stands firmly above the 1.36 handle versus the dollar. Euro-zone services PMI increased from 57.3 to 58.3 in June, indicating manufacturing activity growth quickened. The market will focus on the European Central Bank interest rate announcement today. It is widely expected that the ECB will keep rates at 4.00% unchanged. ECB Governor Trichet will give a speech at the post-meeting press conference at 12:30 GMT. Should he speak in hawkish tone about inflation, the market will take this as a signal for further rate increases, which will give the Euro a boost.

The following technical analysis gives us a detailed lookout on what is expected to happen to the pair.

The buying point of EUR/USD is at 1.3630; based on strong demand and continuation on the uptrend.

- Previous resistance is the take profit at 1.3665
- Fibonacci retracement 38.2% represents the stop loss at 1.3585

To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the crossing of the two moving averages above the zero line, the shorter term moving average is faster than the long term and is pointing upwards. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI, we can determine that the market try to break the 70% line.

The momentum oscillator is very important to understand the strength of the market and as we see on the graph; it break the zero line. The Stochastic oscillator breaks 20% line and moving upwards. Most of the indicators show us the strength of the Euro against the US dollar.

* The following analysis is for information only; Finotec is not responsible for any
decisions or misinterpretations based on the given text.

By Finotec’s professional analyst,
Tony B.

dealingdesk@finotec.com