Monday, August 13, 2007 8:00 GMT
Daily Forex Market Commentary
By: Cornelius Luca, Currencies Analyst, GFT
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GFT Daily x Market Commentary
The FX markets had a calm day of trading on Friday relative to the tumult experienced by the equity and fixed income markets. Central bank did what they were supposed to do to calm the markets: The Federal Reserve added a total of $35 billion in temporary funds, the most since September 2001, and the ECB, BoJ, BoC and RBA pitched in as well. On this backdrop, expectations that the Fed may be forced to perform an emergency inter-meeting rate cut this week should prove to be unfounded. Carry trades reduced losses and the yen and the European currencies closed little changed.
Euro/dollar
The euro/dollar recovered from a nine-day low on Friday as expected. After a mild pullback, the pair should attempt to recover.
Below 1.3643, support comes at 1.3625 from the 38.2% Fibonacci retracement level of the June 13 – July 24 leg of the uptrend. A close below 1.3590 would confirm a double top that targets 1.3350.
Initial resistance is at 1.3715. This is followed by 1.3775. Above 1.3819, resistance looms at 1.3853 Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Mixed
LONG-TERM: Bullish
Dollar/yen
Dollar/yen recovered from a four-day low of 117.19 and a possible double bottom may be in the works. But only a close above 119.90 would confirm this bullish reversal.
Immediate resistance is at 118.75. Above 119.20, resistance is seen at 119.65 from a 50-point pivot that targets 119.15 and 120.15.
Initial support is at 118.25 from a 50-point pivot that targets 117.75 and 118.75.
Oscillators are mixed.
NEAR-TERM: Mixed with upside bias
MEDIUM-TERM: Bearish
LONG-TERM: Bullish
Sterling/dollar
Sterling/dollar recovered to a one-month low of 2.0155 to close unchanged on Friday. With alternating days well, calling the direction sounds like gambling,
Initial resistance is at 2.0315. Strong resistance follows at 2.0400. If the resistance at 2.0460 gives way, look for resistance to emerge at 2.0510.
Immediate support is at 2.0155. A break below this pivotal level would signal a further slide to 2.0060.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss struggled to a one-week high but closed little changed on Friday as well. Following a brief recovery the medium-term selling pressure should resume.
Initial resistance is at 1.2021, which marks the top of the triangle. Above 1.2070, the next cap remains at 1.2140. It would take a break above this level to increase the odds that a significant low is in place
Immediate support is at 1.1930. Below 1.1870, support is seen at 1.1819.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Bearish
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