Forexpros.com Daily Analysis – 11/02/2010

ForexPros Daily Analysis February 11, 2010

Fundamental Analysis: Core Retail Sales (MoM)

Traders of the US look forward to the publication of the Core Retail Sales tomorrow, January 12. The Core Retail Sales is a monthly measurement of all goods sold by retailers based on a sampling of retail stores of different types and sizes in the US, excluding auto. It is an important indicator of consumer spending and also correlated to consumer confidence and considered as a pace indicator of the US economy .
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 rise from the past reading to a reading of 0.40%.

Euro Dollar

The Euro stopped only 6 pips above the resistance specified in yesterday’s report, and this confirms the importance of 1.3805. Today, this level has double importance, with the falling trend line from 1.4577 touching the above mentioned Fibonacci level. As we said yesterday, with Friday’s move taking us close to the channel bottom, and then a fast bounce reaching 1.3666, the odds of an upside correction remains present. But we need a break of today’s resistance 1.3805 before we can say the odds favor a continuation of this rebound. Short-term resistance is still at 1.3805, and breaking it would indicate that the price is already moving higher after the drop we witnessed last week, even if that was only for a short term correction. The targets for such a correction would be the important 1.3857 & 1.3936. While the support is at 1.3752, and breaking it would bring back the drop, targeting 1.3665 & 1.3582.

Support:
• 1.3752: Fibonacci 38.2% for the short term..
• 1.3665: a well known previous support/resistance area.
• 1.3582: Apr 6th high.

Resistance:
• 1.3805: Fibonacci 50% for the last drop from 1.4025, and the falling trend line from 1.4577.
• 1.3857: Fibonacci 61.8% for the last drop from 1.4025.
• 1.3936: Feb 1st high.

USD/JPY

After last Thursday’s sharp drop, we can say that the Dollar-Yen has moved horizontally in the same areas for a whole week, in a period of excitement-free trading. And as the important support & resistance levels for the short term approaching each other, expecting a large move to be just around the corner is a completely logical thing. What is worth mentioning is that during last Thursday’s drop, we have came close to the long term Fibonacci 61.8% support at 88.23, and there is no doubt that this level is the most important support in these areas. As for the short term, the support is at 89.75, and breaking it would indicate a movement to test the most important support 88.23, with a possibility to stop around 88.81 even if temporary. Short term resistance is little changed at 90.04, and breaking it would indicate that the Yen has settled for closing on 88.23 without reaching it, and that we are correcting last Thursday’s drop, or may be the whole drop from 93.75, which might be over close to the Fibonacci support. Such a correction would have ideal targets at 91.14 & 91.76.

Support:
• 89.75: important intraday support.
• 88.81: Friday’s low.
• 88.23: Fibonacci 61.8% for the whole move from 84.81 to 93.75.

Resistance:
• 90.04: important intraday resistance.
• 91.14: Fibonacci 50% for the whole drop from 93.75.
• 91.76: Fibonacci 61.8% for the whole drop from 93.75.

Forex Trading Analysis written by Munther Marji for ForexPros.

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