Daily Analysis – 30/12/2009

Forexpros Daily Analysis Dec 30, 2009

Fundamental Analysis: Chicago PMI

The Chicago PMI will be published tomorrow (Dec 31).
The Chicago Purchasing Managers Index determines the economic health of the manufacturing sector in Chicago region.
Any reading above 50 indicates expansion of the manufacturing sector, while a reading below 50 indicates contraction.
The Chicago PMI can be of some help in forecasting the US ISM and usually has an impressive correlation with it.
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 reading of 56.10, up from the previous 55.20.

Euro Dollar

Although it surpassed 1.4410, the Euro was unable to maintain its gains, and gave them up, returning to 1.43, where there is a critical support at 1.4308. The price reached 1.4304 before bouncing more than 50 pips until this moment. The importance of 1.4308 is that it is Fibonacci 61.8% for the whole rise from 1.4216 to yesterday’s top at 1.4456, and breaking it would mean that the price will come back to test the falling channel that was broken last week (which is currently below 1.41) at a later time. But the targets for the upcoming hours for this break will be 1.4233 & 1.4176. Short-term resistance is at 1.4380, and breaking it would mean that the technical outlook for the short-term would be positive and the targets for this break would be 1.4480 & 1.4536. 

• 1.4308: Fibonacci 61.8% for the rise from 1.4216 to 1.4456.
• 1.4233: important intraday support from last week.
• 1.4176: Sep 1st low.

• 1.4380: Fibonacci 50% for the short-term & a well known previous resistance.
• 1.4480: Oct 2nd low.
• 1.4536: a well known previous support/resistance area.


Finally, the Dollar-Yen is trading above 91.78! As it reached 92 this morning, and stopped at 92.24. Thus, we think that a test of the area that caught our attention 92.31-92.52 is only a matter of time. And if this area is broken, the Dollar will take off, towards March 19th low 93.53, with a possibility to stop at 93.08, where there is a resistance that cannot be ignored. On the other hand, if the price fails to capitalize on the break of 91.78, a drop towards 91.12 where the rising trend line from 84.81, will follow. And if this level is broken, the price will drop towards the important 90.18, and if broken we are to see 89.55.

• 91.12: the rising trend line from 84.81.
• 90.18: Fibonacci 61.8% for the whole move from 88.91 to 92.24.
• 89.55: previous important intraday low.

• 92.31-92.52: resistance area created between Oct 27th & Sep 21st tops.
• 93.08: Jul 22nd low.
• 93.53: Mar 19h low.

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