ForexPros Daily Analysis June 15, 2010


Fundamental Analysis: BoE Gov King Speaks

European traders await the speech by, Bank of England governor, Mervyn King. As head of Britain's central bank, which controls key short term interest rates, King has more influence over sterling's value than any other person. Traders scrutinize his public engagements for clues regarding future monetary policy. His comments may spark a short-term positive or negative trend.

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Euro Dollar

The Euro broke the resistance specified in yesterday’s report 1.2214, and successfully reached the first suggested target 1.2295 with stunning accuracy (yesterday’s high was 1.2296). After that, the single currency dropped for more than 100 pips so far, which confirms what we have said that we should not confuse this actual trend break and the change in direction for the short term, with the persisting downtrend for the medium term which is still going strong. This retreat, from a well known resistance & a target area means that the “hot” rise for the Euro is going cold! If we break the short term support 1.2187, the Euro will probably give up the latest gains. And it will target two important levels: 1.2086 first, then the support provided by the rising trend lien from the 4-year low, which is at 1.2007. Needless to say that this is a very important level. On the other hand, the resistance is at 1.2254, and as long as we are below it, dropping more & more from yesterday’s top will be expected. But if we break it we will target 1.2295 again, and later 1.2352.

Support:
• 1.2187: important intraday support.
• 1.2086: Fibonacci 61.8 for the whole rising move from last weeks low to yesterday’s high.
• 1.2007: the rising trend line from last week’s low

Resistance:
• 1.2254: short term 61.8% Fibonacci.
• 1.2295: May 20h low.
• 1.2352: May 1st high.

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USD/JPY

Dollar/Yen broke the resistance specified in yesterday’s report 91.60, but it did not make it to 91(the low at the moment of preparing this report is 91.14). The most important technical event for the past 24 hours was the fact that the descending trend line from last week’s top has got very close to the rising trend line from may 20th low, and it seems as if they are touching at the important 90.96. This makes this support the single most important support without a shadow of a doubt! It seems as if we are about to test it, and we suggested keeping an eye at this pair as it gets closer to this level, because this very test is what will determine and set the short term direction. If we break 90.96 the price will drop hard, to 89.81 first, and then to 88.96, both levels are significant and critical support levels. The resistance is provided by the falling trend line from yesterday’s top on intraday charts, at 91.47. If we break this support, a new short term rise will be initiated, targeting 91.91 & 92.56.

Support:
• 90.96: the touching point of two important trend lines: the rising trend line from May 20th low, and the falling trend line from last week’s top. The single most important support for the short term.
• 89.81: May 26th low.
• 88.96: May 20th low.

Resistance:
• 91.47: the falling trend line from yesterday’s high on intraday charts.
• 91.91: June 8th high.
• 92.56: Apr 13th low.

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Forex trading analysis written by Munther Marji for Forexpros.

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