Thread: Forexpros Daily Analysis - 08/12/2009

Forexpros Daily Analysis Dec 8, 2009


Fundamental Analysis: Interest Rate Decision

The Reserve Bank of New Zealand (RBNZ) will release its decision on short term interest rate Tomorrow (Dec 9).
The decision on where to set interest rates depends mostly on growth outlook and inflation. The primary objective of the central bank is to achieve price stability. High interest rates attract foreigners looking for the best "risk-free" return on their money, which can dramatically increases demand for the nation's currency.
A higher than expected rate is positive/bullish for the NZD, while a lower than expected rate is negative/bearish for the NZD.

Analysts forecast Tomorrow's rate to remain stable at 2.50%.

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Euro Dollar– Falling 5 waves & an awaited upward correction

The Euro broke the support 1.4850 and successfully reached the first target 1.4760, stopping just 5 pips below it, and bouncing back more than 130 pips. We can see a very clear set of 5 waves falling from 1.5139 (as illustrated on the attached chart), that match all of Elliott waves rules. And if our wave count is correct, that means 2 things: first the first phase of the falling trend from 1.5139 is over, and that calls for an upward correction. And the second is that after that upward correction that matches the falling move, the falling trend will resume to new lows below 1.4755! Short-term support is Fibonacci 61.8% at 1.4806, and if broken the odds of falling below yesterday’s low will be enormous. Our targets for such a drop are 1.4724 & 1.4649. Whereas the resistance is at 1.4844, and breaking it would mean launching an upward correction that ideally targets 1.4947 & 1.4992.

Support:
• 1.4806: Fibonacci 61.8% for the short-term.
• 1.4724: Fibonacci 38.2% for the whole rise from 1.4045.
• 1.4649: Oct 7th low.

Resistance:
• 1.4896: intraday resistance.
• 1.4947: Fibonacci 50% for the drop from 1.5139
• 1.4992: Fibonacci 61.8% for the drop from 1.5139

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USDJPY– Standing on the edge!

As we expected in yesterday’s report when we said “ a falling correction is the most logical expectation after a move of the size we seen on Friday”, Dollar-Yen broke the support 89.52 and fell to reach 88.75 this morning. It seems that we are standing on an important support, because we have actually touched the trendline rising from 85.07. That is why we will consider this line as the most important support of the day, which is currently at 88.75, and we are just pips above it. If this line is broken, the falling correction will go on and target 88.33 first, and then the important Fibonacci 50% support for the whole rise from 84.81at 87.78. But, if price manage to survive the touch of this line, it will be ready for another jump that is expected to break short-term resistance 89.13 and target 89.75 first, and then November 12th top 90.59.

Support:
• 88.75: the rising trendline from 85.07 on the hourly chart.
• 88.33: previous well known support/resistance area.
• 87.78: Fibonacci 50% for the whole move from 84.81 to 90.75.

Resistance:
• 89.13: intraday resistance on the hourly chart.
• 89.75: Fibonacci 50% for short-term.
• 90.59: Nov 12th high.

Forex Trading Analysis written by Munther Marji for Forexpros

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Oil fell to below $73 a barrel on Tuesday after a 2% fall the previous day, pressured by the slow recovery in energy demand and ample supplies, as well as a firmer dollar.

The dollar was higher against a basket of currencies, making dollar-denominated commodities more expensive for holders of other currencies. U.S. inventory data due later is expected to show rising crude stocks.

"We're expecting crude builds in the data later today and the dollar is starting to firm up again," said Rob Montefusco, a trader at Sucden Financial in London.