U.S. Dollar Remains at Important Support Against the Yen

By: ForexPros

Traders await the Bank of Canada’s (BOC) decision on short term interest rate which will be announced tomorrow (Tuesday, 20/10).

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.
Analysts predict the interest rate to remain stable at 0.25%.

Euro Dollar

As expected, Failure to break 1.4962 twice, drove the Euro down to the bottom of the channel drawn on the hourly & intraday charts, reaching this bottom with accuracy as we can note on the charts. Failure at 1.4962 could be a signal of a change in trend before reaching the top of the channel. Thus we must keep an open eye towards any reversal signals that could appear here. Short-term support is Fibonacci support 1.4849, a break would signal that a correction of some kind has started. And if this is the case, what will be expected is a correction for the move up from 1.4672 (at least), which is expected to drop the price back to the important 1.4782 first (Fibonacci 61.8% for the short-term), and if broken, we can expect more drop. Short-term resistance is 1.4899, it is the key to reach 1.50 and the top of the channel.

Support:
• 1.4849: Fibonacci 38.2% for the short-term.
• 1.4782: Fibonacci 61.8% for the short-term, plus the rising trendline from 1.4480 on the intraday charts.
• 1.4723: Fibonacci 50% for the rise from 1.4480.

Resistance:
• 1.4899: short-term resistance.
• 1.4966: Thursday's high, and the resistance that stopped the price twice.
• 1.5032: the top of the rising channel on the hourly chart.
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USD/JPY

The Dollar-Yen stayed above the important support 90.14, and reached 91.31 on Friday. It seems that it stopped close to the upper limit of the rising channel drawn on the chart. 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. As for the support, the most important support is the retest level of the broken trendline, and Fibonacci 50% for the short-term at 90.07, 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 last week's attempt for a break.

Support:
• 90.36: Fibonacci 38.2% for the short-term.
• 90.07: Fibonacci 50% short-term and the retest level for the broken trendline.
• 88.68: support area that supported the price twice this month.

Resistance:
• 90.97: the falling trendline from Friday's top on intraday charts.
• 91.63: previous support & resistance area, the most important resistance for the short-term.
• 91.93: Sep 2nd low.

Analysis by: http://www.Forexpros.com - Written by Munther T. Marji

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