ForexPros Daily Analysis January 20, 2010


Fundamental Analysis: Initial Jobless Claims

Traders anticipate the publication tomorrow (21 January) of the Initial Jobless Claims. It is a measure of the number of people who file for unemployment benefits for the first time during the given week. This data is collected by the Department of Labor, and published as a weekly report.
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.
On a week-to-week basis, claims are quite volatile.
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 predict a slight change from the previous reading of 444.00k to a future reading of 440.00k.

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Euro Dollar

The Euro broke yesterday’s support 1.4303, and successfully reached both suggested targets for this break 1.4216 & 1.4176. Reaching areas below 1.4216 so fast, indicates how solid this break was, and confirms its importance. But, now after we have reached here, we should keep open minds towards every possibility. The most probable one is of course a continuation of the Dollar rally, and dragging the Euro lower and lower. This scenario gains more confidence if and when we break 1.4185, and in this case the next set of targets will be 1.4103 and the important 1.4006. But, if it turns out that today’s movement will be opposite to the direction of the break we witnessed yesterday, the Euro will break the resistance at 1.4216, and in this case we may see a strong rise targeting Fibonacci retracement levels 1.4322 & 1.4371.

Support:
• 1.4185: the most important intraday support for the last few hours.
• 1.4103: Aug 10th low.
• 1.4176: the important bottom of Jul 29th.

Resistance:
• 1.4216: Dec 22nd bottom.
• 1.4322: Fibonacci 38.2% for the whole drop from 1.4577.
• 1.4371: Fibonacci 50% for the whole drop from 1.4577.

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USD/JPY

In an unexpected fashion, Dollar-Yen broke the resistance 90.90 and challenged the resistance area near 91.30, in a break that is completely opposite to the technical outlook that followed the break of 90.76. This break makes the picture unclear, and we will be awaiting clearer signals by breaking the support o resistance of the day 90.76 & 91.30. Short term support is 90.76, breaking it would initiate a down move that we expect to be stronger that what we have seen lately, and would target 89.79 and 89.22. And as we said, the most important resistance is 91.30, and if broken, we will be in an upward correction for the whole drop from 93.75, which will ideally target the 3 main Fibonacci retracement levels 91.64, 92.04 & 92.44.

Support:
• 90.76: Fibonacci 61.8% for the whole rising move from 88.91 to 93.75.
• 89.79: Fibonacci 61.8% for the whole rising move from 87.35 to 93.75.
• 89.22: a previous well known support/resistance area.

Resistance:
• 91.30: a well known support/resistance area which stopped yesterday’s rise.
• 91.64: Fibonacci 38.2% for the whole move down from 93.75.
• 92.44: Fibonacci 61.8% for the whole move down from 93.75.

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Forex Trading Analysis written by Munther Marji for ForexPros.

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