ForexPros Daily Analysis February 25, 2010


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Fundamental Analysis: Existing Home Sales

Traders of the US anticipate the publication of the Existing Home Sales report. It measures the annualized number of existing residential buildings that were sold during the previous month.
This report helps to analyze the strength of the US housing market, which helps to analysis the economy as a whole.

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 5.5 M.

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Euro Dollar 

The Euro broke the support specified in yesterday’s reports 1.3514, dropped about 70 pips without reaching the suggested target 1.3422. Also, the price managed to keep trading above last Friday’s low, the important bottom 1.3442. Today, we see this support as the most important, and if the price stays above it, the odds of rising will be bigger. But these odds will suffer a severe hit once we break this level, even with very few pips. If 1.3442 gets broken, we see the Euro continuing the drop that started yesterday at 1.3625, and we see it leaving the 1.34 areas targeting 1.3384 as a first target for this break, and 1.3299 as a second target. The resistance is at 1.3495, and breaking it would indicate we are correcting yesterday’s drop. The ideal target for such a correction would be 1.3558, and if broken, the Euro will show enough strength to jump to 1.3632, and may be more.

Support:
• 1.3442: Feb 19th low.
• 1.3384: Jan 19th 2009 high.
• 1.3299: Apr 24th high.

Resistance:
• 1.3495: Feb 17th high.
• 1.3558: Fibonacci 61.8% for the short term.
• 1.3632: the falling trend line from 1.4192.

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USD/JPY

Dollar-Yen broke the support specified in yesterday’s report 89.90 and stopped only 8 pips before reaching the first suggested target 89.22. Breaking 89.90 holds a lot of importance on the technical side, because this area was the most important support for the short term, and because breaking it indicates the drop from 92.31 is (probably) not just a corrective one, and that is why it will go on, on the short term. Yesterday’s target 89.22, will be today’s support, and if the price manages to break it, we will move towards the next set of targets in the 88 area, most important of which are 88.53 & 88.00. As for the resistance, it is at 89.75, and breaking it would indicate this pair is targeting the short term Fibonacci retracement levels, and the major 3 levels are at 90.39, 90.72 & 91.05. We picked the first and last of them as targets for the 89.75 break.

Support:
• 89.22: Feb 10th low.
• 88.53: Feb 4th low.
• 88.00: Fibonacci 61.8% for the short term.

Resistance:
• 89.75: the most important resistance on the hourly chart.
• 90.39: Fibonacci 38.2% for the short term.
• 91.05: Fibonacci 61.8% for the short term.

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Forex Trading Analysis written by Munther Marji for ForexPros.

For information on US dollar index see ForexPros.

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Disclaimer:
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.