Daily Forex Market Commentary

Tuesday, August 21, 2007 8:00 GMT
Daily Forex Market Commentary
By: Cornelius Luca, Currencies Analyst, GFT
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GFT Daily Market Commentary

The FX markets had a day of uneasy calm on Monday, with the stocks up in the wake of the cosmetic move the Federal Reserve executed on Friday. But the T Bills yields collapsed and this tends to be a huge red flag — is there a big name about to fold? Or worse? On this crisis milieu it’s even more difficult that usual to call the market — the best take is another wave of selling of the yen crosses.

Euro/dollar

The euro/dollar treaded water around a secondary Fibonacci retracement level at 1.3475 on Monday and was stuck in an inside range. Sideways to lower trading is expected.

Below 1.3410, support remains at 1.3358. Distant support is at 1.3265.

Initial resistance is still in place at 1.3550. Above 1.3625 there is resistance at 1.3700. This is followed by 1.3775.

Oscillators are declining.

NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Bullish

Dollar/yen

Dollar/yen extended its recovery on Monday, but this shouldn’t last long. Following an early mild recovery the sell-off should resume as the pair remains under the trendline rising since January 2005, now at 116.00.

Immediate resistance is at 115.50 from another 50-point pivot, which targets 115.00 and 116.00.

Initial support is at 114.20 from another 50-point pivot that targets 113.70 and 114.70. Below 113.25, support is at 112.90 from a 50-point pivot that targets 113.40 and 112.40.

Oscillators are declining.

NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Mixed

Sterling/dollar

Sterling/dollar struggled higher on Tuesday but was stuck within Friday’s ample range. The pair is oversold in the uptrend, so the initial move should be up — don’t expect more than a mild upmove.

Initial resistance is at 1.9900. Strong resistance follows at 1.9937. It is very unlikely that the resistance at 2.0015 will gives way. More weakness remains in store, but an immediate bounce is likely.

Immediate support is at 1.9820. The next floor is at 1.9750. A break below the pivotal level at 1.9653 would signal a further slide to 1.9550.

Oscillators are mixed.

NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Bullish

Dollar/Swiss franc

One day after nailing a one-week low dollar/Swiss franc marked time in a tight range. Following a brief recovery the medium-term selling pressure should resume.

Initial resistance is at 1.2100. The next level is .2140. Above 1.2219, distant resistance is at 1.2310.

Immediate support is at 1.1995. Below 1.1870, support is seen at 1.1819. Next levels are 1.1788 and 1.1740

Oscillators are rising.

NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bearish

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