ForexPros Daily Analysis June 3, 2010
Fundamental Analysis: US Nonfarm Payrolls
Traders of the US anticipate the publication of the Nonfarm Payrolls. The data measures the change in the number of employed people during the last month of all non-farming businesses. The total non-farm payroll accounts for approximately 80% of the workers who produce the entire gross domestic product of the United States. It is the single most important piece of data contained in the employment report, which considered to offer the best overview of the economy. The monthly changes and the revisions in payrolls can be quite volatile. A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD. Analysts predict a future reading of 500K, a significant change from the past reading of 290K.
In what may be considered some kind of a surprise, the Euro broke the falling channel on the hourly & 4-hour charts at 1.2270 during the Asian session! This break could cause a lot of excitement before the weekend. It is only logical to expect more rise after this break. But we will not put our bets on it, before breaking the last top inside the broken channel, which was 1.2351. This is for the short term, but for the medium term, the Euro will stay weak until it breaks 1.2456 in a real and decisive way. So, today’s resistance is at 1.2351, and only after a break here we would expect a continuation of the rising move. If this break happens, the first target will be a test of the single most important resistance for the time being 1.2456. And if this one is also broken, then 1.2560 will be a first & modest target, on the way to higher targets later. On the other hand, the support is at 1.2280, and breaking it would mean that the Euro’s channel break is losing momentum and effect, and that the price will resume its downtrend. The targets for such a break would be 1.2174, and then the last important support before the 1.20 level, which is at 1.2068.
• 1.2280: the rising trend line from yesterday’s low on intraday charts/
• 1.2174: yesterday’s low.
• 1.2068: Apr 13th 2006 low, the last important support before 1.2000.
• 1.2351: the last top on the series of tops defining the broken channel, which was broken during the Asian session.
• 1.2456: Fibonacci 61.8% for the drop from 1.2670.
• 1.2560: May 24th high.
Finally, the Dollar/Yen reached the long awaited 91.84! But the surprise was that it broke it, easily, and managed to reach 92.34 (today’s high until the moment of preparing this report). This break will improve the weak technical outlook on the short term. But reaching the top of rising trend channel on the hourly & 4-hours charts indicates that the Dollar will face difficulties in its struggle to achieve more gains (please refer to the attached chart). Therefore, the dollar should break the top of this channel as soon as possible to maintain the positive technical outlook which emerged after breaking 91.84. If we break the resistance at 92.31, we will see the price jump to 9295 and may be 93.65 before the weekend. On the other hand, the support is at 92.02, and if broken, the price will correct its last surge, in a correction which would ideally target the area between 91.05 & 90.25. The latter has become he most important support for the short term, for now.
• 92.02: the bottom of the rising trend channel from yesterday’s low on intraday charts.
• 91.05: Fibonacci 38.2% level for the rising move from 88.96.
• 89.72: Fibonacci 61.8% level for the rising move from 88.96.
• 92.31: the top of the rising channel on the hourly chart.
• 92.95: May 18th high.
• 93.65: Apr 6th low.
Forex Trading Analysis written by Munther Marji for Forex Pros.
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