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Monday July 19, 2010 - 10:19:52 GMT
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Forexpros Daily Analysis - 19/07/2010ForexPros Daily Analysis July 19,
Analysis: Interest Rate Decision
The Bank of Canada (BOC)
decision on short term interest rate. 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 CAD, while a lower than expected rate is
negative/bearish for the CAD. The analysts predict a future reading of
The Euro stopped only
8 pips into the resistance specified in Fridayâ€™s report (Fridayâ€™s & last
weekâ€™s high was 1.3005), before retreating to areas slightly below 1.29. This
shows just how important this resistance is, which is probably the level most
qualified to turn the Euro around, and resize this soaring move into a
correction! This strong & sharp jump is a natural fruit of breaking the top
of the channel after touching it for a record number of times, but eventually
the Euro managed to break it! After that serious barrier, the energized Euro had
faced even a harder one: Fibonacci 61.8% for the giant move down from 1.3690 to
1.1875. This level is at 1.2997, and will act as a heavy weight barrier in the
face of this rise, which in spite of the fact that it has achieved more than
1000 pips so far, it still looks corrective (simply because it did not break the
divine ratio 61.8%). Now, even after a drop of more than 100 pips from Fridayâ€™s
top, 1.2997 will still be the most important resistance in the neighborhood,
only a break here means more gains. If broken, we will soar above 1.30 for the
first time in more than 2 months, and we will target 1.3092 & 1.3153. On the
other hand, the support is at 1.2889, breaking it would indicate that we are
drifting away from 1.2997. And that will target 1.2820 & the important
â€˘ 1.2889: important intraday level.
1.2820: Fibonacci 38.2% for the short term.
â€˘ 1.2707: Fibonacci 61.8% for the
â€˘ 1.2997: Fibonacci 61.8% for the
massive dive from 1.3690 to 1.1875.
â€˘ 1.3092: May 10th high.
â€˘ 1.3153: May
The headline of Fridayâ€™s
USDJPYâ€™s reports was â€śOdds are we are already in wave 5â€ť, today, we can take
another step and confirm that assumption, we are definitely in the downward wave
5! The Dollar/Yen broke the support specified in Fridayâ€™s report 86.95 and
successfully reached the first suggested target 86.47. If we look at the
attached chart, we will see that the Yenâ€™s strength has penetrated the lows of
last December & January. This leaves us with no notable support protecting
the 15-year low which was reached last November at 84.81! We will not be a bit
surprised if this pair started to move in that direction, and tried to break
that low! On the contrary, we have been expecting this for weeks now, and it was
included in our reports several times. Short term support is at 86.46, and if
broken, the price will continue searching for new lows, targeting 85.84, then
the 15-year low 84.81. Resistance is presented by the falling trend line from
Wednesdayâ€™s tops, which is currently running at 87.08. If broken, we will target
short term Fibonacci levels 87.67 & the important
â€˘ 86.46: Asian session low.
â€˘ 85.84: Nov
â€˘ 84.81: Now 27th low, and the lowest level since
â€˘ 87.08: the falling trend line from
Wednesdayâ€™s high on the hourly chart.
â€˘ 87.67: short term Fibonacci 50%
â€˘ 88.01: short term Fibonacci 61.8% level.
---Forex trading analysis written
by Munther Marji for Forexpros.
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