ForexPros Daily Analysis May 4, 2010


Fundamental Analysis: ADP Nonfarm Employment Change

Traders of the US anticipate the publication of the ADP National Employment Report. It is a measure of the monthly change of nonfarm private employment, based on a subset of aggregated and anonymous payroll data that represents approximately 400,000 U.S. business clients. This release, 2 days before the government-released employment data , is a good predictive to the government's non-farm payrolls data. The change in this indicator can be very 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 30.00k.

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Euro Dollar

The Euro broke Fibonacci 61.8% support for the short term at 1.3202, and fell to 1.3153. Although we did not reach the suggested target for this break, it was a pretty important break, since it weakened the technical outlook, because this support was the last notable support protecting this cycle’s low, and the 1-year low, 1.3113. Thus, after breaking 1.3202, the odds favor a dip below 1.3113 to reach a new cycle low. We expect the Dollar to launch an attack at this level immediately after breaking the short term support 1.3173. If this support is broken, the pair will target 1.3113 first, and then 1.3050, the last notable support before the 1.30 landmark. The resistance is at 1.3273, it is very hard for us to picture the EURUSD in a positive technical outlook while it is trading below this level. But if it does break this level, it will be free of most of the pressure, and it will target 1.3354 and may be 1.3434.

Support:
• 1.3173: important intraday support, protecting yesterday’s low.
• 1.3113: Mar 30th 2009 low.
• 1.3050: Apr 20th 2009 high.

Resistance:
• 1.3273: Fibonacci 61.8% for the short term.
• 1.3354: Apr 6th high.
• 1.3434: the important low of Mar 2nd.

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USD/JPY

The Dollar/Yen broke the resistance specified in yesterday’s report, 94.30, and came close to our suggested target 95.05 (the high until the moment of preparing this report is 94.96). This rising trend finally penetrated 94.30, and managed to reach a new year-high at 94.96, the highest level for this pair since Aug 25th. This rising trend, is not a whole world away from the most important support for the time being, which combines short term Fibonacci 61.8% with the rising trend line from 91.58 on the hourly charts. For the short term, support is at 94.77, if we go back to trade below this level, the USDJPY will be correcting yesterday’s rising move, or even the whole rise from 92.80. The targets for this correction will be 94.13 first, and then the all important 93.63. On the other hand, the resistance is at yesterday’s target 95.05. If broken, it will be hard for any other resistance to stop the price before reaching 96 , where the targets 95.90 & 96.69 awaits.

Support:
• 94.77: Apr 5th high.
• 94.13: Fibonacci 38.2% for the short term.
• 93.63: Fibonacci 61.8% for the short term, and the rising trend line from 91.58.

Resistance:
• 95.05: Aug 24th high.
• 95.90: Jul 29th low.
• 96.69: May 19th 2009 high.

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Forex Trading Analysis written by Munther Marji for ForexPros.

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