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Dynamic Price Limit for "Blue Fuel" Came Into Force in the EU

2/16/2023 10:56 AM

The EUR/USD pair shows moderate growth, correcting after the "bearish" dynamics the day before. The euro is testing the level of 1.0700 for a breakout, waiting for the emergence of new drivers for growth. However, important macroeconomic publications from Europe are not expected until the end of the week, so it is possible that the instrument will continue to develop multidirectional dynamics.

The data released the day before failed to provide significant support to the euro. The Consumer Price Index in Spain in January corrected from 5.8% to 5.9% in annual terms, which turned out to be worse than neutral forecasts, while in monthly terms the indicator fell by another 0.2% after -0.3% in the previous month. Industrial Production in the euro area in December fell by 1.1% after rising by 1.4% a month earlier, while analysts expected only -0.8%, and in annual terms it fell by 1.7% after an increase of 2.8% a month earlier, while forecasts assumed -0.7%.

The day before, a dynamic price limit for "blue fuel" at the level of 180.0 euros per megawatt-hour came into force in the EU, which will come into effect if gas quotations on the TTF hub in the Netherlands are kept above the specified price for three working days, and also if the price will be 35.0 euros higher than the cost of liquefied natural gas (LNG) on the world market. From the moment of activation, the mechanism will be valid for at least 20 days. If the limit is below 180.0 euros per megawatt-hour for three days in a row, or if there is a shortage of gas that threatens the energy security of the EU, then the mechanism will be turned off.

In turn, macroeconomic statistics from the US on the eve gave the American currency a new impetus to growth. Retail Sales rose 3.0% in January after falling 1.1% in the previous month, while analysts had expected a rise of only 1.8%.

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range expands slightly from below, making way for new local lows for the "bears". MACD is declining keeping a weak sell signal (located below the signal line). Stochastic, having shown an attempt at corrective growth at the beginning of the week, is again reversing into a downward plane, reacting to the appearance of a "bearish" dynamics in yesterday's trading.

Resistance levels: 1.0700, 1.0765, 1.0800, 1.0850. | Support levels: 1.0654, 1.0600, 1.0550, 1.0500.

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