Daily Forex Market Commentary
The strong new home sales helped the dollar recoup early losses but still got stuck in inside ranges versus the European currencies. Dollar/yen slipped on the day amid profit taking on carry trades. This process may accelerate. The US currency remains overbought in the short term, so it should correct lower today versus the yen, but strengthen against the European currencies.
Euro/dollar
Euro/dollar fell further on Thursday and its inability to make even a weak and brief recovery spells volume for its upcoming weakness.
Initial support is at 1.3395. Below it there is close support at 1.3375. Next supports are at 1.3305 and 1.3260.
Immediate resistance is at 1.3450. Next level is 1.3500. Only a close above 1.3545 would signal another attack on the upside to 1.3610. This is unlikely.
Oscillators are declining.
NEAR-TERM: Bearish
MEDIUM-TERM: Bearish
LONG-TERM: Bullish
Dollar/yen
After reaching a new three-month high of 121.87 on Wednesday, dollar/yen headed lower on profit taking in carry trades and this pressure should continue. A significant peak may now be in place.
Initial support is seen at 120.85. Next level is 120.55. Below 120.00, distant support comes at 119.65 from another 50-point pivot that targets 119.15 and 120.15.
Immediate resistance is at 121.35. Above 121.87, resistance remains at 122.18. Distant resistance comes at 122.50 from another 50-point pivot, which targets 122.00 and 123.00.
Oscillators are mixed.
NEAR-TERM: Bearish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Sterling/dollar
Sterling/dollar traded sideways in a tight range after surging to a near two-week high on Wednesday. It failed to break the top of its declining channel, so the pound should struggle lower. Short-term positions are long, so some long liquidation is likely.
Initial support is at 1.9790. Below 1.9715 there still is good support at 1.9655.
Strong resistance is seen at 1.9900 from the top of its declining channel. If this level breaks, then look for a rebound to 1.9960. Above 2.0000 there is distant resistance at 2.0140.
Oscillators are rising.
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Mixed
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss franc only consolidated on Thursday, as expected. The medium-term outlook remains positive, but the pair should tread water today.
Immediate support is at 1.2240. This is followed by 1.2210. Below 1.2170, distant levels are 1.2095 and 1.2065.
Above the resistance at 1.2332 there is good resistance at 1.2370. Next target is 1.2437. Distant resistance looms at 1.2554.
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Slightly bearish
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