Early Technical Analysis for Friday August 4 2006

Full report with charts on Forexalt.com

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Early Technical Analysis: The Market is Focused on NFP

The basic events of Thursday became decisions under rates of the central banks of Britain and the Euro-Zone. As well as it was supposed, ECB has raised the basic discount rate up to 3 %, however to the most important began speech of ECB president Jean - Claude Trichet at traditional press conference. He has noted that inflation most likely there will be above 2 %, and the bank will continue to trace a situation with the prices. It allows assuming, that ECB will continue to raise interest rates. In July Trichet has declared, that the bank continues to remain "vigilant" concerning inflationary processes in region, and is in case of need ready to resolute actions. Futures for interest rates of the Euro-Zone now take into account probability of one more increase until the end of the year on 25 p. to 3.25 %. Unexpectedness for the market began with raise decision by the МРС of Bank of England the interest rate to 4.75 % that occurs for the first time for last 2 years. This decision rendered essential support to pound sterling in relation to dollar and euro.
At first half of day easing of yen occurred as a result of speech of Japaneze deputy minister of finance Hideto Fujii. He has declared that it is necessary for central bank to trace influence of interest rates increase for the last month on a national economy before to undertake the subsequent steps. Yen has risen in price for 1.8 % since representatives of Bank of Japan have declared, that would be wrong to assert, that the central bank will not raise the rate to the end of year.
Losses of dollar had temporary character. At the second half of American session the rate started to be restored sharply, traders explained closing positions before the today's report on employment. Besides support to a rate is rendered with optimistic expectations on Payrolls, where analytics predict growth in July on 145,000. Yesterday service index ISM which has shown decrease up to 54.8 in July against 57.0 month earlier has been published. The separate report has fixed growth of factory orders in June on 1.2 % against +0.7 % in May.
Today is expected the publication of data Payrolls, which last years traditionally causes the highest volatile in the market. Analytics expect growth of this parameter in comparison with the previous report up to 145000 against 121000. However such value hardly will seriously change the situation in the market. As believe, the dollar can receive stimulus for growth at a parameter above 180000 as it can become one more argument for the benefit of those who insists on increase of rates. Value 100000 and below can cause a sharp collapse of dollar on all fronts.

EUR
Weekly chart EUR trend – Range
Resistances
1.2834 (today high), 1.2860 (high 07.07.2006), 1.2971/78 (highs 05.15.2006 and 06.05.2006)
Supports
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), 1.2705/06 (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
1.8913 (yesterday high 08.03.2006), 1.8960 (76.4% retracement of 1.9554 to 1.7047), 1.9023 (high 05.17.2006)
Supports
1.8750 (the rising short-term line from 07.26.2006 at 1.8383 to 08.03.2006 at 1.8695), 1.8687/72 (high 07.27.2006 at 1.8672 and 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)

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)