Forexpros Daily Analysis Oct 21, 2009

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The US Department of Labor will publish its weekly Initial Jobless Claims Report Tomorrow (22 Oct).

The Report is a measure of the number of people who file for unemployment benefits for the first time during the given week.

The number of jobless claims is used as a measure of the health of the job market, as a series of increases indicates that there are fewer people being hired.

Usually, a move of at least 35K in claims is required to signal a meaningful change in job growth.

A higher than expected reading should be taken as negative/bearish for the USD, while a lower than expected reading should be taken as positive/bullish for the USD.

Analysts forecast last week’s measure of 514.00K to rise to 518.00K.

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Euro Dollar

The Euro broke the yesterday's support 1.4964, and reached the first target of this break, and Fibonacci important support 1.4891, tested it strongly, but eventually it survived (yesterday's low 1.4881). We will adopt this support level as support of the day, because if it holds, this would mean that the short-term correction is already over, and that we are heading to areas above yesterday's high 1.4993. But, if broken, what will be expected is a correction for the move up from 1.4480, and if this is the case, targets will not be less than 1.4797, and may be 1.4737 also. Short-term resistance is 1.4950, and if broken, we will head with the Euro to the top of the rising channel on the hourly chart, which is currently at 1.5048, and may be we will reach the highest level since Aug 2008, at the resistance 1.5082. The support level at 1.4891 is the most important level for today, and is the line separating positive areas from negative.

Support:
• 1.4891: Fibonacci 61.8% for the short-term.
• 1.4842-1.4849: The support area which contains the lows of Thursday & Friday.
• 1.4797: Fibonacci 38.2% for the whole move from 1.4480.

Resistance:
• 1.4950: short-term resistance.
• 1.5000: psychological level.
• 1.5048: the top of the rising channel on the hourly chart.

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USD/JPY

The Dollar-Yen with amazing accuracy at the first support in yesterday's report (lowest price after the issuance of yesterday's report is 90.06), and then rose to 91.05, breaking 90.73 on the way, but what followed was a modest move. The most important support is the Fibonacci 61.8% for the short-term at 89.77, and if broken the direction would be down to test the important support 88.68, which must hold to prevent another attempt to test 87.97 which survived 2 weeks ago an attempt for a break. As for the resistance, the most important one is 90.90, and the key to the most important stop in these areas is 91.63, which is expected to be an important test. Breaking it means that this rise will continue in the next few days, to areas above 92, where 92.52-92.58 is the first target for this break. While failure here would indicate that this is but a short-term rise.

Support:
• 89.77: Fibonacci 50% short-term and the bottom of the rising channel on the intraday charts.
• 89.38: Oct 7th high.
• 88.68: support area that supported the price twice this month.

Resistance:
• 90.90: short-term resistance.
• 91.63: previous support & resistance area, the most important resistance for the short-term.
• 91.93: Sep 2nd low.

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Forex trading analysis by Forexpros - Written by Munther T. Marji

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Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.