Forexpros Daily Analysis March 17, 2010
Fundamental Analysis: Core CPI (MoM)
Traders of the US await the publication of the Core Consumer Price Index (CPI). The index measures the changes in the price of goods and services excluding food and energy. The CPI measures price change from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation in the US. A higher than expected reading should be taken as positive/bullish for the USD (as the common way to fight inflation is raising rates, which may attract foreign investment), while a lower than expected reading should be taken as negative/bearish for the USD. Analysts predict a reading of 0.10%.
The Euro spent the whole last 24 hours above the important 1.3635 support, broke the 1.3734, and approached 1.38 again, reaching 1.3785 until the moment of preparing this report, 9 pips below Friday’s top. This behavior comes in agreement, with technical outlook that we have adopted in the past 2 days after 1.3635 survived the test. But, the Euro was supposed to achieve more than this, and not to stop on the first barrier on the way up 1.3794. The most important support for the short term now is 1.3742, and holding above it is crucial in order to achieve more gains. But if broken, we will head to another test of the important 1.3635, and breaking it would topple the price to 1.3543. The nearest resistance is 1.3794, and if broken, the positive technical outlook will be confirmed, and we will finally see the important resistance levels above 1.38, the most important for today is 1.3861, and may be we will then see 1.3936, while the Euro approaches the 1.40 important landmark.
• 1.3742: Fibonacci 61.8% for the micro term.
• 1.3635: Fibonacci 61.8% for the short term.
• 1.3543: Mar 10th low.
• 1.3794: Friday’s high.
• 1.3861: Jan 29th low.
• 1.3938: Jan 28th low.
Opposite to what is expected, the Dollar-Yen held above the support specified in yesterday’s report 90.02, and broke the resistance 90.47, but the movement was extremely limited, with the price topping at 90.66. We have adjusted the lines that frame the current area, to make the upper limit at Monday’s top 90.78, which is very close to last Wednesday’s top 90.80. The lower limit is provided by the rising trend line from 89.61 on the hourly chart, and is currently at 90.12, which was tested yesterday, and passed the test. In case we broke the resistance 90.78 we will see the Dollar take control, and drive this pair higher, as we see it targeting the important 91.60 first, then 92.31 which is important as well. But in case we broke the rising trend line at 90.12, the price will start to fall, confirming the negative technical outlook which came after Friday’s price behaviour. This fall is expected to target 89.37 & 88.72. But before breaking any of these 2 important limits, the technical outlook is mixed.
• 90.12: the rising trend line from 89.61 on the hourly chart.
• 89.37: Mar 2nd low
• 88.72: Feb 26th low.
• 90.78: Monday’s high.
• 91.60: Oct 29th high.
• 92.31: Oct 27th high.
Forex trading analysis by Munther Marji for ForexPros.com.
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