Daily forex market commentary
Forex Market Commentary for October 16, 2006
GFT Daily Forex Market Commentary by Cornelius Luca
The overbought dollar alleviated some of this pressure in early trading on Friday and then rallied sharply with help from the strong US data. But the sharp gains fizzled and the prospects of an uptrend are less clear. The dollar should consolidate initially before attempting to advance any further.
Euro/dollar
Euro/dollar reversed early gains to hit a new low for the downtrend.
The pair must close below the strong support at 1.2470 to confirm versus weakness.
Next support comes at 1.2410. A close below this level would also trigger a double top formation, which targets 1.1920. But that’s far, far away. Below 1.2370, support now comes at 1.2310.
If 1.2470 holds, then expect the euro/dollar to bounce to 1.2585. Strong resistance follows at 1.2650.
Oscillators are declining.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen reversed early losses and hit a new 10-month high at 119.86 on Friday. The pair formed a bullish flag, which targets 120.40. The outlook is guardedly positive, with the market eyeing the previous significant peak at 121.40, which was nailed back in December. The key level is 119.65 from a 50-point pivot that targets 119.15 and 120.15.
Above 120.15, resistance is seen at 120.50. Further resistance is the pegged at 121.05 from another 50-point pivot that targets 120.55 and 121.55.
Below 119.15, dollar/yen has support at 118.45. That’s followed at 118.25 by another 50-point pivot that targets 117.75 and 118.75.
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Slightly bullish
LONG-TERM: Bearish
Sterling/dollar
Sterling/dollar made encountered choppy trading and closed little changed on Friday.
Initial resistance is now seen at 1.8665. Above 1.8710, resistance comes at 1.8800.
Immediate support is at 1.8518. That’s followed by 1.8425.
Oscillators are declining.
NEAR-TERM: Mixed
MEDIUM-TERM: Slightly bearish
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss reversed losses and reached a 5 ½-month high at 1.2768. That was the third consecutive week of gains. The break on a closing basis above 1.2700 adds confidence for further gains this week.
Above 1.2768, the pair has resistance at 1.2800. Next level is at 1.2910.
Below 1.2690, dollar/Swiss franc has support at 1.2590.
Oscillators are rising.
NEAR-TERM: Bearish
MEDIUM-TERM: Mixed to slightly bullish
LONG-TERM: Bearish
Cornelius Luca
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