Daily forex market commentary
The dollar marched further up against the European currencies and even versus the yen on Friday. The outlook remains positive for the dollar, but it is now overbought in the short term, so first look a mild pullback.
Euro/dollar
Euro/dollar sank to a 1 ½-month low of 1.2650 on Friday after falling aggressively for three days last week. The close below the trendline support at 1.2700 is very negative. The pair reached critical support at 1.2655 and a close below this level would signal further weakness.
Initial support is seen between 1.2631 and 1.2639. Further support looms at 1.2555.
Immediate resistance is now pegged at 1.2700. Above 1.2750 there is resistance at 1.2830.
Oscillators are declining.
NEAR-TERM: Mixed
MEDIUM-TERM: Mixed to slightly lower
LONG-TERM: Bullish
Dollar/yen
Dollar/yen reversed early losses and closed higher on Friday.
The pair has initial support at 116.85 from another 50-point pivot, which targets 116.35 and 117.35. Below 115.80, good support remains at 115.50, from a 50-pip pivot, which targets 116.00 and 115.00.
Above the area between 117.35 and 117.46, good resistance remains at 118.25 from a 50-point pivot that targets 117.75 and 118.75.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Mixed to slightly bullish
LONG-TERM: Bearish
Sterling/dollar
Sterling/dollar fell to a five-week low during the past week and erased most of the massive gains made the week ending August 4. This significant long liquidation of pounds across the board finally alleviated its overbought condition. The slide on Friday triggered a double top formation that targets 1.8380. Following a brief bounce, the market should attempt pressing the cable further down.
Immediate support is now pegged nearby at 1.8650 from the 50% retracement of the July to August upmove and from a trendline rising since early April. That’s followed by strong support only at 1.8555.
Initial resistance is seen at 1.8720. Above 1.8780 there is resistance at 1.8870.
Oscillators are declining.
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Mixed
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss franc rallied again on Friday to reach a near 1 ½-month high of 1.2506. There is more room on the upside, but some profit taking is first due.
Initial resistance is at 1.2516. Above 1.2540, dollar/Swiss franc has resistance at 1.2580. There is a pivotal high at 1.2594.
Below the strong support at 1.2260, next floor is pegged at 1.2195.
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Mixed to slightly bullish
LONG-TERM: Bearish
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