Daily Analysis – 15/12/2009

Forexpros Daily Analysis Dec 15, 2009

Fundamental Analysis: Interest Rate Decision

The Federal Open Market Committee (FOMC) decision on short term interest rate is due out tommorow (Dec 16) in the US.
The decision on where to set interest rates depends mostly on growth outlook and inflation. The primary objective of the central bank is to achieve price stability. High interest rates attract foreigners looking for the best “risk-free” return on their money, which can dramatically increases demand for the nation’s currency.
A higher than expected rate is positive/bullish for the USD, while a lower than expected rate is negative/bearish for the USD.
Analysts forecast that the interest rate will remain at 0.25%.

Euro Dollar

The Euro surpassed the support 1.4656, and settled for 1.4616, but it did nopt test or even come close to the most important resistance 1.4701. The rising trend line from Tuesday’s low (and the lower limit for the supposed triangle pattern) is currently very close to Fibonacci 61.8% for the short-term at 1.4701. This makes this double resistance the most important, and only breaking it would improve the technical outlook for the Euro. If broken, we will enter a correction for the whole drop from 1.5139, which will target 1.4796 at least, and probably 1.4862. As for the support it is at 1.4621 and breaking it would mean that the rising correction from Friday’s low is probably over, and that would target 1.4566 and then 1.4510.

• 1.4621: intraday support from last week.
• 1.4597: a previous well known support/resistance area.
• 1.4510: previous support area that includes several daily lows.

• 1.4701: Fibonacci 61.8% for the short-term, and the lower trendline in the supposed triangle formation that was broken on Friday.
• 1.4796: Fibonacci 38.2% for the drop from 1.5139.
• 1.4862: Fibonacci 50% for the drop from 1.5139.


Dollar-Yen slightly pierced through both the support & resistance specified in yesterday’s reports, with a few points in both cases, without being able to generate a real break. Currently we see USDJPY between two lines: the falling trend line from 90.75 (which is currently at 89.28), and the rising trend line from 84.81 (which is currently at 88.59). And since we have two descending tops at 90.75 & 89.79, and two ascending bottoms at 84.81 & 87.35 (which means lack of direction), it is recommended that we do not adopt any direction prior to a break, and it is wise to wait for one of them to break. If we break the support 88.59 , the drop coming from 89.79 will resume & the next set of targets would be Fibonacci support levels 87.78 & 87.08. As for the resistance 89.28, a new visit to areas above 90 would be expected, where the targets 90.08 & 90.90 will await.

• 88.59: the rising trend line from 84.81.
• 87.78: Fibonacci 50% for the whole move from 84.81 to 90.75.
• 87.08: Fibonacci 61.8% for the whole move from 84.81 to 90.75.

• 89.28: the falling trend line from 90.75 on the hourly chart.
• 90.08: hourly resistance.
• 90.90: previous well known support/resistance area.

Forex trading analysis by Munther Marji for Forexpros. See our new commodities section on Forexpros.

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