Euro Dollar Breaks Support Ahead of Quarterly GDP Data

By: ForexPros

Tomorrow, Dec 22, the Gross Domestic Product will be published in the UK, USA and New Zealand.
The Gross Domestic Product (GDP) is the broadest measure of economic activity and is a key indicator for the economy's health. The quarterly percent changes in GDP shows the growth rate of the economy as a whole.
A higher than expected reading should be taken as positive/bullish for the currency, while a lower than expected reading should be taken as negative/bearish for the currency.

Analysts forecast a reading of -0.30% for the GDP, up from -0.10% and a reading of 2.80% for the USD, representing no change. The NZD is expected to read 0.10%, down from 0.40%.

Euro Dollar

The Euro broke the support specified in Friday’s report 1.4346, and successfully reached the first target 1.4280. It looks from the channel drawn on the attached chart that 1.4410 is the limit the separates the continuation of the downtrend from its reversal, since it combines the top of the channel with the moving average SMA100.

As long as the price is below this level, the downtrend will continue, looking for fresh lows below Friday’s low 1.4260. Short-term support is at 1.4303 and breaking it would increase confidence in the downtrend, and would target 1.4205 and then the bottom of the channel which is currently at 1.4140. A break of today’s most important resistance 1.4410 would cause a jump to 1.4502, and may be later to 1.4584.

Support:
• 1.4303: Thursday’s low.
• 1.4205: Aug 26th low.
• 1.4140: the bottom of the descending channel on the hourly chart.

Resistance:
• 1.4410: the most important resistance for today, which combines the top of the channel with the moving average SMA100.
• 1.4502: Dec 15th low.
• 1.4584: Dec 11th low.

USD/JPY

Dollar-Yen broke the specified resistance in Friday’s report 89.80, and successfully reached both targets 90.40 & 90.90 with amazing accuracy (Friday’s high 90.89). We see that the drop that followed to 90.22 is just a short-term correction, and that the advance will carry on after we are done with it to areas above 90.90. We build this opinion on our wave count for the short-term which shows that we are in wave 4 of 5 rising waves that started at 88.91 on Thursday.

If our wave count turns out to be right, we will not break the support 89.86, the price will start rising breaking short-term resistance 90.46, and targeting 91.30 first, and may be 91.93 afterwards. If a surprise happens and we break 89.86 the suggested wave count will be invalid, and the price will drop targeting the rising trend line from 85.84 which is currently at 89.17, and may be 88.70.

Support:
• 89.86: Fibonacci 61.8% for wave 3 according to our short-term wave count.
• 89.17: the rising trend line from 85.84.
• 88.70: Fibonacci 61.8% for the whole move from 84.81 to 90.89.

Resistance:
• 90.46: the falling trend line from Friday’s top on intraday charts.
• 91.30: Nov 4th high.
• 91.93: Sep 3rd low.

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

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