Market Forex EUR/USD Analysis March 2013

• EUR/USD weekly analysis for March 1, 2013 (rebound strategy)

This morning the euro is around the psychological level, trading at price levels of January 4, which seems to be easily vulnerable for the next few hours. This drop was due to the unemployment rate in the eurozone, it returned at a record high and almost touching 12%.   Now if you look at the weekly chart of the euro, this pair has a strong support at 1.2898, which is the fractal weekly. 

Probably before the pair has a technical rebound, there will be a drop to this level. On the other hand, a weekly close above 1.30 increases the odds of a bounce till the level of the uptrend line. Therefore, we recommend being attentive to these two key levels: 1.2898 (Fractal weekly) and 1.30 psychological level.  

As it was expected US GDP in the fourth quarter was revised, erasing a previously estimated contraction of 0.1%. Gross domestic product grew at a 0.1% annual rate. The forecast called for a 0.5% gain. Today the main issue is US budget. US President Barack Obama’s meeting with congressional leaders today will not yield a breakthrough to prevent $85 bln in federal spending cuts. 

There will be a lot of information pertaining to the Euro Area. However, it is expected to be neutral. The topic events are Retail Sales in Germany in January (11:00 GMT+4), forecast 1.15 against -1.7% in December and the Unemployment rate in the eurozone in January (14:00 GMT+4), forecast for 11.8% against 11.7% in December. 

Data on US Personal incomes in January is expected to be -2.3% vs. 2.6% in December. The news is published at 17:30 GMT+4. ISM Manufacturing in February (will be issued at 19:00 GMT+4) is expected to be 52.7 vs. 53.1 in the previous month. Thus, if the decision on budget cuts is taken and it is neutral, for instance it will be decided to delay it for 2 months, then the markets may reflect the negative macroeconomic data and optimism provoked by a new delay. From the technical point of view, after the support at the level of 1.3010 is reached, the downward move to the level of 1.2970, the trendline on the daily chart, is possible. The upward move is hindered by two levels on the H4 – 1.3118 and 1.3160. The third target is 1.3207, the level of Fibonacci 200%.