Early Technical Analysis for Thursday August 3 2006

Full report with charts on Forexalt.com

-----------------------------------------------------------------------------------------

Early Technical Analysis: The Market awaits ECB Meeting

On Wednesday the euro came to an end of 3-weeks maxima in relation to dollar as traders have preferred to close a part of long positions before ECB session. From the beginning of the year, euro has become stronger on 7.5 % on a background of rates increase ECB is up to 2.75 %. Interrogation of economists has shown that today the central bank of region will raise the basic rate up to 3 %. The last month, acting on traditional press conferences, ECB president Jean - Claude Trichet has declared that the central bank still shows "vigilance" in the attitude of inflationary processes and is ready to sharp measures for protection of price stability. Futures says untill the end of current year ECB will finish the rate with 3.25 %.
Yesterday positions of euro for some time have improved after published by private concern Automated Data Processing Inc. (ADP) the report has shown, that employment in the USA in July has grown on 99,000, that is the minimal parameter for this year. The report has left two days prior to the most important report of month - Payrolls. on July, 5 the dollar has flied up to 2-week maxima against euro after the report of this firm has shown the maximal growth of employment in June since 2001. However in two days from it rally remained nothing, as the official statistics has shown reduction of quantity of new workplaces. In result, the dollar has failed to 4-week minima both against euro, and against yen.
The euro can continue to weaken on fears of that the chapter of Bank of Spain Miguel Angel Fernandez Ordonez which will take part today in voting under rates as a member Governing Council meeting of the ECB can vote against increase. Last week Mr. Ordonez has declared that high interest rates bear in themselves threat to economic growth of Spain. Reports of this week have shown, that industrial PMI the Euro-Zone has reached 6-years peak, and retails of Germany have grown more, was rather than predicted.

In the morning we shall pay attention to the data on Retail in the Euro-Zone. Growth of parameter that can promote small strengthening of euro is expected.
The bank of England as expected, will not change the rate, and this decision does not render essential influence on the market.
The ECB will also consider today a question on the rate of crediting. Analytics mark, that the market has already put in pawn in the current rate of euro an opportunity of ECB rate increase on 3 %. Therefore the decision in itself will not cause special movements in the market; the greater interest will be represented with press conference of ECB president Trichet and his forecasts concerning prospects of a credit policy of bank. In particular, the market expects increase of the rate until the end of the year up to 3.5 %, and will search hints in Trichet performance on it. If formulations of the banker will be insufficiently aggressive the euro can fall in the price.
At last the index of business activity in sector of services the USA (ISM services index) in the evening will be published. The segment of this sector makes 60 % of economy, but essential changes in the market it almost never causes. Analytics for decrease in an index that can put short-term pressure upon a dollar exchange rate wait.

EUR
Weekly chart EUR trend – Range
Resistances
1.2771/78 (high 07.28.2006 at 1.2771 and 61.8% retracement of 1.3483 to 1.1640 at 1.2778 and 61.8% retracement of 1.2978 to 1.2459 at 1.2778), 1.2834 (high 08.02.2006), 1.2860 (high 07.07.2006)
Supports
1.2740 (today low), 1.2705/06 (23.6% retracement from 1.1825 to 1.2978 at 1.2705 and 61.8% retracement from 1.2860 to 1.2459 at 1.2706), 1.2660/57 (50.0% retracement of 1.2860 to 1.2459 at 1.2660 and 38.2% retracement of 1.2978 to 1.2459 at 1.2657)

GBP
Weekly chart GBP trend - Range
Resistances
1.8800 (target and psychological level), 1.8877 (high 06.05.2006), 1.8960/1.9023 (76.4% retracement of 1.9554 to 1.7047 at 1.8960 and high 05.17.2006 at 1.9023)
Supports
1.8672/87 (Thursday high 07.27.2006 at 1.8672 and Monday’s high 07.31.2006 at1.8687), 1.8595/1.8605 (61.8% retracement of 1.9554 to 1.7047 at 1.8595 and 23.6% retracement of 1.7229 to 1.9023 at 1.8605), 1.8555 (the bottom line of the “yellow” channel)

CHF
Weekly chart CHF trend - Bullish
Resistances
1.2365 (Tuesday high 08.01.2006), 1.2423/39 (61.8% retracement of 1.1287 to 1.4281 at 1.2439 and the 38.2% retracement from 1.3237 to 1.1920 at 1.2423), 1.2545 (high 07.25.2006)
Supports
1.2285/83 (50.0% retracement from 1.1287 to 1.3284 at 1.2285 and 76.4% retracement from 1.2185 to 1.2593 at 1.2283), 1.2231 (23.6% retracement from 1.3237 to 1.1920), 1.2185/78(low 07.07.2006 and 61.8% retracement of 1.1920 to 1.2593 at 1.2178)

JPY
Weekly chart JPY trend – Capped?
Resistances
115.40 (61.8% retracement from 119.37 to 108.96), 115.77/81 (23.6% retracement from 108.96 to 117.86 at 115.77 and low 07.21.2006 at 115.81), 116.70/90 (resistance line from high 12.04.2005 to 04.11.2006 at 116.70 and 76.4% retracement of 119.37 to 108.96 at 116.90)
Supports
114.19 (50.0% retracement from 119.37 to 108.96), 113.44/43 (low 07.10.2006 and 50% retracement of 108.96 to 117.86 at 113.43), 112.95 (38.2% retracement from 119.37 to 108.96)