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Tuesday November 3, 2009 - 11:07:06 GMT
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Forexpros Daily Analysis - 03/11/2009Forexpros Daily Analysis Nov 3, 2009
The Federal Open Market Committee (FOMC) decision on short term interest rate is due out tomorrow (Nov 4).
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 USD, while a lower than expected rate is negative/bearish for the USD.
Analysts forecast no change, with the interest rate remaining at 0.25%.
In spite of the importance of the 1.4682 support that has stopped price
twice exactly at the same price, we will not wait until it is broken to
turn our outlook for the Euro to negative. We will set out most
important support at Fibonacci 61.8% for the short-term 1.4744, because
it is the last important support defending 1.4682, and if 1.4744 is
broken, the odds of breaking 1.4682 on a third attempt will be big. The
most important support for the short-term is 1.4809, provided by the
falling trendline from 1.4926, and breaking it would give the Euro some
strength that could be enough to test Fibonacci 50% at 1.4872. We will
await a break of either of those levels before deciding on today's
direction. If we break support at 1.4744, that will mean a continuation
of falling on the short-term and targeting the important bottom 1.4649
and may be 1.4610 after that. But if we break the resistance 1.4809,
today's direction would be up, and the suggested targets would be
1.4872 first, and may be 1.4916.
â€¢ 1.4744: Fibonacci 61.8% for the short-term.
â€¢ 1.4649: Oct 7th low.
â€¢ 1.4610: Sep 21st low.
â€¢ 1.4980: the falling trendline from 1.4926.
â€¢ 1.4872: Fibonacci 50% for the drop 1.5061.
â€¢ 1.4916: Fibonacci 61.8% for the drop 1.5061.
Down to the pip, the Dollar-Yen stopped at Fibonacci resistance
specified in yesterday's report 90.68 (yesterday's high is EXACTLY
90.68), and as you know, stopping near Fibonacci resistance levels is
an evidence that the trend in down. Thatâ€™s why we find ourselves
favoring a continuation of the short-term downtrend as long as we are
below 90.68. And we will await a break of short-term Fibonacci support
90.16, after the price literally "sat" on it for the past few hours. If
we break this support the downtrend will continue, and will target
89.61 first, then 89.07 and may be the important 88.64. The price
behavior for yesterday, and the amazingly accurate reversal at the
Fibonacci resistance that we talked about (90.68),makes it the most
important resistance, and only if it is broken, we will change our
negative outlook for this pair. If this surprise happens, we will be
heading to a test the upper limit of the short-term downtrend (the
trendline drawn on the chart), which is currently at 90.95, and that
would be an important test if it happens.
â€¢ 90.16: Fibonacci 61.8% for short-term.
â€¢ 89.61: previous support & Oct 12th low.
â€¢ 89.07: previous intraday support.
â€¢ 90.68: Fibonacci 61.8% for the short-term, important resistance.
â€¢ 90.95: the upper limit of the short-term downtrend and the trendline descending from last week tops.
â€¢ 91.60: Oct 29th high.
Forex trading analysis by Forexpros â€“ Written by Munther Marji
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
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