Daily Forex Market Commentary

GFT Daily Forex Market Commentary for April 16, 2007
Forex Market Commentary by Cornelius Luca, Currencies Analyst, GFT
Visit GFT to Learn More

The dollar fell sharply versus the European currencies on Friday on renewed expectations of higher rates outside the U.S. versus flat domestic borrowing costs and the yen sank on misplaced disappointment that the G7 was not planning to criticize Japan for its artificially weak currency.

Euro/dollar

Euro/dollar rallied to a 2 ½ years on Friday. It’s overbought, but sell it only if a bearish reversal is confirmed. On a medium-term basis, the euro/dollar formed several bullish flags.

Initial resistance is at 1.3620. Above 1.3705, distant resistance is at 1.3805.

If 1.3620 holds, look for a correction toward 1.3440. Intermediate support is at 1.3540 and 1.3500.

Oscillators are rising.

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

Dollar/yen

Dollar/yen encountered very volatile conditions on Friday, when it reached a 1 ½-month high and formed the range for the entire week. It’s still facing the key Gann levels that bordered it last week, so only closes outside them will inject new life in this pair. Dollar/yen has been pushing against the top of its rising resistance for six consecutive days, so unless it breaks higher quickly, the downside will become really favored.

Initial resistance remains at 119.65 from another 50-point pivot that targets 119.15 and 120.15. Distant resistance now comes at 120.75.

Below 118.75, strong support remains at 118.25 from a 50-point pivot that targets 117.75 and 118.75.

Oscillators are rising.

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

Sterling/dollar

Sterling/dollar nailed an over 2 ½-month high of 1.9886 on Friday. It should attempt to pad its gains, but it is difficult to ignore the fact that the MACD provides a bearish divergence and that the pair is overbought. This suggests that long positions should be accompanied by fairly close stop-loss orders.

Initial resistance is at 1.9905. If this Gann level breaks, the pound would likely take attack another Gann level at 1.9990. This is only a hair away from the psychological 2.0000 level.

Immediate support is at 1.9825. Below 1.9780, strong support follows at 1.9700.

Oscillators are rising.

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

Dollar/Swiss franc

Dollar/Swiss franc fell to as low as a three-week low on Friday, but when the dust settled, it failed to close outside its rising channel. Expect more attempts to close below this line, now at around 1.2145.

If successful, look for a re-test of the support at 1.2068. Below it there is a key level at 1.2030. Dollar/Swiss franc then has strong support at 1.2000.

Initial resistance comes at 1.2230. Next level is 1.2290. Distant resistance is at 1.2370.

Oscillators are mixed.

NEAR-TERM: Mixed with bearish bias
MEDIUM-TERM: Mixed with upside bias
LONG-TERM: Mixed

 

DISCLAIMER: This forum and the information provided here should not be relied on as a substitute for extensive independent research before making your investment decisions. Global Forex Trading is merely providing this column for your general information. The views of the author are not necessarily those of Global Forex Trading, its owners, officers, agents or employees. In addition, any projections or views of the market provided by the author may not prove to be accurate. Global Forex Trading and Cornelius Luca will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this column. Global Forex Trading and Cornelius Luca do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.