Daily Forex Market Commentary
Thursday, July 26, 2007 8:00 GMT
Daily Forex Market Commentary
By: Cornelius Luca, Currencies Analyst, GFT
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The dollar recovered aggressively against the European currencies and even reversed losses versus the yen. Expect more of the same today and focus further on the yen crosses. Also, watch out for the Ifo report.
Euro/dollar
The overbought euro/dollar finally made a more substantial decline and hit a 15-day low on Wednesday after coining a new high for the uptrend a day earlier. Sell again on a bounce. Initial support comes at 1.3697. Next level is at 1.3625. Distant support is at 1.3560.Resistance now comes at 1.3760. If the euro/dollar manages to break above the pivot high at 1.3853, then look for a test of the resistance at 1.3900 and the uptrend is back in the game. This is unlikely.
Oscillators are mixed.
NEAR-TERM: Mixed with downside bias
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen recovered from a 2 ½-month low but there is ongoing threat of liquidating standard yen crosses. It formed a head-and-shoulders pattern, and the close below the neckline at 121.16 adds confidence. Mild selling pressure should continue but from higher levels. Below 120.25 strong support is at 119.65 from another 50-point pivot that targets 119.15 and 120.15. The target of the bearish reversal pattern is at around 118.00.Immediate resistance is at 120.75. Key level remains at 121.05, a 50-point pivot, which targets 120.55 and 121.55. Only a break above 122.15 would signal a more aggressive recovery to 122.50, which is a 50-point pivot, which targets 122.00 and 123.00
Oscillators are falling.
NEAR-TERM: Mixed
MEDIUM-TERM: Mixed
LONG-TERM: Bullish
Sterling/dollar
The overbought sterling/dollar fell sharply on Wednesday a day after reaching a fresh 26 ½-year high. It reduced some of the losses into the close, so sell it again only on a bounce. Initial support is at 2.0500. A break below 2.0460 would signal a slide to 2.0400. Immediate resistance is at 2.0575. Resistance then remains at 2.0630 and at 2.0654. The next level looms at 2.0765. Distant resistance is at 2.0845.
Oscillators are rising.
NEAR-TERM: Mixed with downside bias
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss franc broke out of an inside range on its way to a 15-day high. A pullback may be seen before the next move up. Resistance is at 1.2165. It would take a break above this level to increase the odds that a significant low is in place and the pair would shoot for 1.2215. Distant resistance is at 1.2275. Immediate support is at 1.2080. Below 1.2012, strong support is at 1.1962. If this pivotal low gives way, then the downtrend is rejuvenated and dollar/Swiss should challenge 1.1835.
Oscillators are mixed.
NEAR-TERM: Mixed with upside bias
MEDIUM-TERM: Bearish
LONG-TERM: Bearish
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