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Forexpros Daily Analysis - 13/05/2010

Fundamental Analysis: Core Retail Sales

Traders of the US anticipate the publication of the Core Retail Sales. The Core Retail Sales is a monthly measurement of all goods sold by retailers based on a sampling of retail stores of different types and sizes in the US, excluding auto. It is an important indicator of consumer spending and also correlated to consumer confidence and considered as a pace indicator of the US economy. 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 0.50%.

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Euro Dollar

The Euro broke the resistance specified in yesterday’s report 1.2693, but could not climb more than 45 pips after that, before tumbling down & approaching 1.26. But this decline, has found our favorite support which we talked about yesterday, waiting! The drop stopped at 1.2610, only 2 pips above the all important 1.2608. Today, this support will still be the most important support, because it managed to stop the drop twice: the first late in Tuesday’s Asian session, and the second shortly after the US markets closing on Wednesday. If the price holds above this support, it will finally have a break, and we could see a rising correction after this drop of more than 500 pips in less than 48 hours! Today’s resistance is at 1.2688, and breaking it would indicate we are already in a rising correction for the whole drop from 1.3092. The ideal targets for such a correction are 1.2790 & 1.2848, which we will focus on for today. Later, the price may reach the third and ideal target for this correction at 1.2906. Support is as we said, at the all important 1.2608, and breaking it would drag the price to 1.2511 then to a fresh cycle low at 1.2455.

Support:
• 1.2608: important intraday low.
• 1.2511: last week’s & one-year low.
• 1.2455: Mar 4th 2009 low, an important bottom.

Resistance:
• 1.2688: Fibonacci 61.8% for the drop from yesterday’s top.
• 1.2790: Fibonacci 38.2% for the drop from 1.3092.
• 1.2848: Fibonacci 50% for the drop from 1.3092.

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USD/JPY

The Dollar/Yen’s slow rise, has stopped accurately at the previous support 93.27 as you can see on the attached chart. But, the most important resistance around here is still 93.49. Here is where all out attention must be placed. After several extremely boring days, which no meaningful moves at all, we could see excitement back in the game, if this level s broken. In this case, the price will not target the attractive 93.96, but it will not settle for anything below 94, where the well known support/resistance area 94.31 will be waiting, to act as a first target for this break. If the climb goes on it will shoot for 95.05. On the other hand, the support is provided by the rising trend line from 90.83 on intraday charts, which is a line that has supported the price for six days now. If it gets broken, the Dollar will get a hard hit, leading it to 91.40 first, and then to 90.75.

Support:
• 93.07: the rising trend line from 90.83 on intraday charts.
• 91.40: Fibonacci 38.2% support for the rise from Thursday’s low.
• 90.75: Fibonacci 50% support for the rise from Thursday’s low.

Resistance:
• 93.49: previous hourly resistance, very close to Monday’s top.
• 94.31: previous hourly support.
• 95.05: Aug 24th high.


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