Daily Forex Market Commentary
The dollar tumbled further early on Wednesday versus the European currencies the yen, but receding fears of the impact of subprime crisis on the financial system helped it recover. Dollar/yen reversed losses and the yen crosses surged as well. Unless a surprise comes out of CDOs, the US currency should see a reprieve today. The US trade data should be ignored — it can only be weak overall.
Euro/dollar
Euro/dollar surged to a new lifetime high (or about a 12-year high in legacy terms) of 1.3797 on Wednesday before giving up its gains. The overbought pair is due for a decline Initial support is at 1.3715. Below the strong support at 1.3665, there is a distant level at 1.3570. Immediate resistance is still seen at 1.3785. A break above it would signal a further aggressive rally to 1.3887.
Oscillators are rising.
NEAR-TERM: Mixed with downside risk
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen fell to its lowest level since June 8 early on Wednesday, but then reversed its losses aggressively and
recouped about half of Tuesday’s losses. It should attempt to recover further today.
Above the key resistance at 122.50 from a 50-point pivot, which targets 122.00 and 123.00, distant resistance comes at 123.65. Initial support is now seen at 122.00. Next level is 121.50. Strong supports follow at 120.89 and 120.65.
Oscillators are mixed.
NEAR-TERM: Mixed to slightly higher
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Sterling/dollar
Sterling/dollar surged to a new 26 1/4-year high of 2.0363 on Wednesday. Hold long positions with a trailing stop, as the pair is severely overbought. Above 2.0363 there is resistance is at 2.0430. Distant resistance looms at 2.0530. Immediate support is now seen at 2.0280. Next level is at 2.0200. Only a break below 2.0150 on a closing basis would signal a more sustained decline, but this is unlikely.
Oscillators are rising.
NEAR-TERM: Mixed with downside risk
MEDIUM-TERM: Bullish
LONG-TERM: Bearish
Dollar/Swiss franc
Dollar/Swiss franc spiked down to the lowest level of the year early on Wednesday but then managed to reverse losses of the day and some of Tuesday’s too. The medium-term outlook is still negative, but some further recovery is likely today. Above 1.2085, resistance is seen at 1.2100. Next level comes at 1.2175. Distant resistance is at 1.2235. Initial support is now seen at 1.12020 from a pivot low. Below 1.1994, Wednesday’s low, distant support follows at 1.1883.
Oscillators are falling.
NEAR-TERM: Mixed with upside risk
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
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