Daily forex market commentary

Forex Market Commentary for October 16, 2006
GFT Daily Forex Market Commentary by Cornelius Luca
Visit GFT to Learn More

The overbought dollar alleviated some of this pressure in early trading on Friday and then rallied sharply with help from the strong US data. But the sharp gains fizzled and the prospects of an uptrend are less clear. The dollar should consolidate initially before attempting to advance any further.

Euro/dollar

Euro/dollar reversed early gains to hit a new low for the downtrend.

The pair must close below the strong support at 1.2470 to confirm versus weakness.

Next support comes at 1.2410. A close below this level would also trigger a double top formation, which targets 1.1920. But that’s far, far away. Below 1.2370, support now comes at 1.2310.

If 1.2470 holds, then expect the euro/dollar to bounce to 1.2585. Strong resistance follows at 1.2650.

Oscillators are declining.

NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Bullish

Dollar/yen

Dollar/yen reversed early losses and hit a new 10-month high at 119.86 on Friday. The pair formed a bullish flag, which targets 120.40. The outlook is guardedly positive, with the market eyeing the previous significant peak at 121.40, which was nailed back in December. The key level is 119.65 from a 50-point pivot that targets 119.15 and 120.15.

Above 120.15, resistance is seen at 120.50. Further resistance is the pegged at 121.05 from another 50-point pivot that targets 120.55 and 121.55.

Below 119.15, dollar/yen has support at 118.45. That’s followed at 118.25 by another 50-point pivot that targets 117.75 and 118.75.

Oscillators are rising.

NEAR-TERM: Mixed
MEDIUM-TERM: Slightly bullish
LONG-TERM: Bearish

Sterling/dollar

Sterling/dollar made encountered choppy trading and closed little changed on Friday.

Initial resistance is now seen at 1.8665. Above 1.8710, resistance comes at 1.8800.

Immediate support is at 1.8518. That’s followed by 1.8425.

Oscillators are declining.

NEAR-TERM: Mixed
MEDIUM-TERM: Slightly bearish
LONG-TERM: Bullish

Dollar/Swiss franc

Dollar/Swiss reversed losses and reached a 5 ½-month high at 1.2768. That was the third consecutive week of gains. The break on a closing basis above 1.2700 adds confidence for further gains this week.

Above 1.2768, the pair has resistance at 1.2800. Next level is at 1.2910.

Below 1.2690, dollar/Swiss franc has support at 1.2590.

Oscillators are rising.

NEAR-TERM: Bearish
MEDIUM-TERM: Mixed to slightly bullish
LONG-TERM: Bearish

Cornelius Luca

DISCLAIMER: This forum and the information provided here should not be relied on as a substitute for extensive independent research before making your investment decisions. Global Forex Trading is merely providing this column for your general information. The views of the author are not necessarily those of Global Forex Trading, its owners, officers, agents or employees. In addition, any projections or views of the market provided by the author may not prove to be accurate. Global Forex Trading and Cornelius Luca will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this column. Global Forex Trading and Cornelius Luca do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.