Look for Consolidation in the Dollar
GFT Daily Forex Market Commentary for May 30, 2007
Forex Market Commentary by Cornelius Luca, Currencies Analyst, GFT
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The dollar slipped against the European currencies on Tuesday with help from comments by European Central Bank officials suggesting more regional rate increases. The strong Conference Board’s index of consumer confidence helped the dollar trim losses. Wednesday should see the US currency consolidate.
Euro/dollar
Euro/dollar rallied unexpectedly to an eight-day high on Tuesday due to the hawkish comments by European Central Bank officials. The pair slipped from the highs and should traded sideways today.
It has initial support at 1.3450 and strong support at 1.3410. If the latter level breaks, look for a test of the support at 1.3375. Below this the Fibonacci retracement level there is support at 1.3275.
Immediate resistance is between 1.3520 and 1.3530. A close above 1.3545 would signal another attack on the upside to 1.3610.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen traded sideways and in an inside range on Tuesday. The medium-term outlook remains bullish, but the short-term outlook is neutral.
Key support level this week is at 121.05 from a 50-point pivot, which targets 120.55 and 121.55. Below 120.00, strong support comes at 119.65 from another 50-point pivot that targets 119.15 and 120.15.
Above 121.89 there still is resistance at 122.18. Next resistance comes at 122.50 from another 50-point pivot.
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Sterling/dollar
Sterling/dollar fell from a 19-day high to close lower on Tuesday. Since it failed to break the top of its declining channel, the pound should struggle lower. Short-term positions are long, so some more long liquidation is likely.
Initial support is still seen at 1.9790. Below 1.9715 there still is good support at 1.9655.
Immediate resistance is at 1.9870. Strong resistance remains at 1.9900 from the top of its declining channel. If this level breaks, then look for a rebound to 1.9960. Distant resistance is at 2.0000.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Mixed
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss franc sank to a 12-day low on Tuesday before reducing losses. The medium-term outlook remains positive, but in the short-term the pair should consolidate.
Initial resistance is at 1.2250. Above the resistance at 1.2332 there is good resistance at 1.2370. Next target is 1.2437. Distant resistance looms at 1.2554.
Immediate support is at 1.2200. Below 1.2170, distant levels are 1.2095 and 1.2065.
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Slightly bearish
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