Daily Forex Market Commentary
GFT Daily Forex Market Commentary for January 31, 2007
Forex Market Commentary by Cornelius Luca, Currencies Analyst, GFT
Dollar/yen surged further on Monday following weak Japanese data, and this gave carry trades another boost. The weakness of the data suggests that the Bank of Japan may postpone a rate hike expected in February. On this milieu, cautiously remain long euro/yen and sterling/yen.
Euro/dollar
One day after sinking to a two-week low, the euro/dollar rallied on Monday. Following another minor bounce, the pair should edge lower again.
Above 1.2983, the pair has resistance at 1.3043. The next level is 1.3065.
Initial support is at 1.2930. 1.2882 follows. Below 1.2868, euro/dollar has strong support at 1.2820. A close below this level would signal a further significant decline to 1.2760. Next level is 1.2705. Distant support lies at 1.2595.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Mixed
LONG-TERM: Bullish
Dollar/yen
Dollar/yen climbed to a new high for its uptrend following weak local data, which casts doubt over a BoJ rate hike next month. Retail sales contracted 0.2 percent in December and 0.3 percent on a yearly basis, the biggest decrease in eight months. It should now slip on profit taking.
Below 121.55, the key support level is at 121.05 from a 50-pip pivot that targets 120.55 and 121.55. Initial is at 120.55. Further support is seen at 120.15.
Above 121.90, strong resistance remains at 122.50 from a 50-point pivot, which targets 122.00 and 123.00.
Oscillators are rising.
NEAR-TERM: Mixed to slightly bearish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Sterling/dollar
Strong US data (housing prices and the CBI survey) failed to boost sterling/dollar much, but the pair should struggle higher today. Only a break below key support and its behavior at this level will provide the new direction.
Initial resistance is at 1.9665. Above 1.9735, resistance comes at 1.9775 and then at 1.9810.
Immediate support is at 1.9586. Below the area between 1.9510 and 1.9500, strong support follows from a rising trendline at 1.9460. Further support lies at 1.9400.
Oscillators are mixed.
NEAR-TERM: Mixed to slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Mixed
Dollar/Swiss franc
One day after nailing a 2 ½-month high, dollar/Swiss franc consolidated. More information is needed. Again, the overall bias is bullish, but the first move should be lower.
Above 1.2565, resistance comes at 1.2660 from the target of a bull flag. Next level is 1.2720.
Immediate support comes at 1.2490. Below 1.2430 there is support at 1.2375.
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Mixed
LONG-TERM: Mixed
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