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ForexPros Daily Analysis February 8, 2010
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Fundamental Analysis: German CPI
Europeantraders look forward to the publication of the German Consumer PriceIndex (CPI) tomorrow, February 9. The index measures the changes in theprice of goods and services.
The CPI measures price change from the perspective of the consumer.
Itis a key way to measure changes in purchasing trends and inflation inGermany. A higher than expected reading should be taken aspositive/bullish for the EUR (as the common way to fight inflation israising rates, which may attract foreign investment), while a lowerthan expected reading should be taken as negative/bearish for the EUR.Analysts predict no change in the future reading, a rate of -0.60%.
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Euro Dollar
TheEuro came very close to the 4-hour channel on Friday, after breakingthe support specified in the report, and the drop stopped only 2 pipsbefore the first suggested target 1.3852. With this move taking usclose to the channel bottom, and then a fast bounce reaching 1.3666,the odds of an upside correction remains present, but we need a breakof 1.3666 before we can say the odds favor that. Short-term resistanceis at 1.3666, and breaking it would indicate that the price is alreadymoving higher after the drop we witnessed last week, even if that wasonly for a short term correction. The targets for such a correctionwould be 1.3752 & 1.3805. While the support is at 1.3620, andbreaking it would bring back Friday’s target under the spotlight:1.3582 & 1.3516.
Support:
• 1.3620: the falling trend line drawn from Jan 21st bottom (1.4027) on the hourly chart.
• 1.3582: Apr 6th high.
• 1.3516: Apr 2nd high.
Resistance:
• 1.3666: short term resistance.
• 1.3752: Fibonacci 38.2% for the last drop from 1.4025.
• 1.3805: Fibonacci 50% for the last drop from 1.4025.
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USD/JPY
ThePound dropped in a free fall after breaking the support specified inFriday’s report 1.5690, and reached the target 1.5614 successfully.This morning, a new bottom was reached at 1.5532. It seems that thissharp trend is not tired yet, especially after breaking the fallingtrend channel to the downside, which contributed to this sharp drop.Thus, we will maintain a negative outlook, as long as the price istrading below the bottom of the channel which is at 1.5704 currently.And even though the price is far from this level at the moment, we willconsider this to be resistance of the day, and only if it is brokenthat we will change our long held negative outlook. If this surprisehappens, and we break 1.5704 we will target short term Fibonacciretracement levels 1.5800 & 1.5862. As for the support it is at thenearby 1.5543, and breaking it would indicate that this Dollar tornadowill not stop soon, targeting 1.5445 & the important 1.5350.
Support:
• 1.5543: intraday support.
• 1.5614: Nov 28th 2008 high.
• 1.5512: May 12th high.
Resistance:
• 1.5704 the bottom of the falling broken trend channel.
• 1.5800: Fibonacci 50% for the last drop from 1.6067.
• 1.3863: Fibonacci 61.8% for the last drop from 1.6067.
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Forex Trading Analysis written by Munther Marji for ForexPros.
For information on currency trading see ForexPros.
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Disclaimer:
TradingFutures and Options on Futures and Cash Forex transactions involvessubstantial risk of loss and may not be suitable for all investors. Youshould carefully consider whether trading is suitable for you in lightof your circumstances, knowledge, and financial resources. You may loseall or more of your initial investment. Opinions, market data, andrecommendations are subject to change at any time.
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