Afternoon Forex Market Commentary

GFT Daily Forex Market Commentary for January 24, 2007
Forex Market Commentary by Cornelius Luca, Currencies Analyst, GFT

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The dollar made a collapsing decline versus the European currencies but stepped in place against the yen.
Even now, when we got more information, the overbought the European currencies/yen crosses and the oversold euro/sterling remain favored. Following some early recovery, the dollar should encounter further selling pressure.

The euro/dollar unexpectedly broke above 1.3020 and this revived its uptrend. The pair reached the top of its rising consolidation; this suggests a pullback before the next move up.

Above Tuesday’s high of 1.3044 resistance comes at 1.3060 and 1.3090. Next level is 1.3130. Distant resistance is at 1.3240.

Initial support is at 1.2990. Below 1.2925, the pair has support at 1.2880 and retains strong support at 1.2820. A close below this level would signal a further significant decline to 1.2760.

Oscillators are rising.

NEAR-TERM: Slightly bullish
MEDIUM-TERM: Slightly bullish
LONG-TERM: Bullish

Dollar/yen recouped early losses to close virtually unchanged and to remain in the proximity of a new high for its uptrend. The overbought pair still needs to display any signs of a corrective decline; until then, the pound/yen cross remains in good shape.

Above 122.10, dollar/yen retains resistance at 122.50 from a 50-point pivot, which targets 122.00 and 123.00. The pair broke the resistance at 121.05, and reached the upside target at 121.55.

Initial support is at 121.30. Good support follows at 121.05 from a 50-pip pivot that targets 120.55 and 121.55. Further support is seen at 120.15. Strong support follows at 119.65 from a 50-pip pivot, which targets 120.15 and 119.15.

Oscillators are rising.

NEAR-TERM: Slightly Bullish
LONG-TERM: Bullish

Sterling/dollar surged to a 14 ½-year high of 1.9914 before trimming gains. The market is now casting a more accepting look on the 2.0000 level. The pair is more overbought by the day, but hold on to long Cable positions until there are clear signs of a correction.

Above 1.9914, resistance comes at 2.0000. Distant resistance follows at 2.0036 and 2.0075.

Below 1.9790, sterling/dollar has support at 1.9760 and 1.9720. Distant support is now seen at 1.9650.

Oscillators are rising.

NEAR-TERM: Bullish

Dollar/Swiss franc
Dollar/Swiss franc finally managed to break out of the sideways phase and made a collapsing decline on Tuesday. Following an early recovery, the dollar should see more weakness.

Immediate support is now seen at 1.2374. 1.2325 follows that. Distant support is pegged at 1.2275.

Initial resistance is at 1.2475. That is followed by1.2546. Above it, resistance remains at 1.2660 from the target of a bull flag.

Oscillators are declining.

NEAR-TERM: Slightly bearish

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