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Forexpros.com Daily Analysis - 07/01/2010

Fundamental Analysis: Nonfarm Payrolls

Traders of the USD await the publication of the Nonfarm Payrolls report due out tomorrow (Jan 8).
The Nonfarm Payrolls measures the change in the number of employed people during the last month of all non-farming businesses. The total non-farm payroll accounts for approximately 80% of the workers who produce the entire gross domestic product of the United States.
It is the single most important piece of data contained in the employment report, which considered to offer the best overview of the economy.
The monthly changes and the revisions in payrolls can be quite 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 forecast a reading of -11.00K.

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Euro Dollar

The Euro broke the resistance 1.4327 and reached our first suggested target 1.4406 successfully. But after reaching 1.4445 it came back to falling, as it is trading now around 1.4360. And with coming back to these areas, we once again assure the importance of 1.4264, and we will consider it the borderline between a continuation of the drop from 1.4482, or a bounce to the upside. But before it we should place our attention on 1.4344, and if broken a test of the important 1.4264 will be underway. If this important support is taken, we expect the Euro to drop towards 1.4176. But if it holds, a test of short term resistance 1.4394 will follow, and breaking it would lead to a rising move targeting 1.4485, which reversed the upside activity, and caused Tuesday’s drop, and later 1.4584.

Support:
• 1.4344: Fibonacci 61.8% for the short term.
• 1.4264: Dec 21st low.
• 1.4176: Sep 1st low.

Resistance:
• 1.4394: the falling trend line from yesterday’s high on intraday charts.
• 1.4485: the resistance that caused Tuesday’s reversal.
• 1.4584: Dec 11th low.

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USD/JPY

As we said yesterday, Dollar-Yen broke the trend line rising from 84.81, but the drop that followed was limited, before going back above the line. This behavior recommends caution, since going back above the broken line stripped a lot of importance for this break. Short-term resistance is 93.08, and the support is at 92.24 . If this support is broken, we will fall to 91.51, and then the important 90.55, which is also another important support for the short term. On the other hand, if the price holds above this support, a short term rise will be initiated, challenging short term resistance at 93.08, and breaking this level would at least lead to challenge the top93.20, targeting the long awaited 93.53, and if this important resistance is broken, we will target 94.05.

Support:
• 92.24: the rising trend line from 84.81
• 91.51: obvious resistance area on the hourly chart.
• 90.55: Fibonacci 61.8% for the whole move from 88.91 to 93.20.

Resistance:
• 93.08: previous support/resistance area.
• 93.53: Mar 19h low.
• 94.05: Aug 28th high.

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