Daily Forex Market Commentary
The oversold dollar rallied smartly on Thursday despite the newest alleged wave of terrorism plot in London, but that was a pure technical play, not a run for safe-haven. The “improvement†of the US trade gap was used as a pretext to buy the US currency, but the move is now slightly overdone. The short term outlook is still positive, but the dollar is facing immediate resistance. Take your cues from the retails sales report and sell back dollars only on a stop-loss order.
Euro/dollar
The euro/dollar suffered more volatile trading on Thursday after rising in the Far East to a new uptrend high and then reversing gains and breaking the bottom of its rising channel held. The medium-term outlook is cautiously positive but in the short term the bias is moderately lower.
Immediate support is at 1.2740. If this important level breaks, then look for a test of 1.2700. Next level is 1.2660. Distant support is at 1.2560.
Initial resistance is at 1.2805. Above 1.2860 there is resistance at 1.2912. Distant resistance remains at 1.3030.
Oscillators are mixed.
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen saw god two-way trading on Thursday but closed little changed, as the slightly rising channel continues.
The key resistance level today is 115.50, from a 50-pip pivot, which targets 116.00 and 115.00. The trendline now comes at 115.80 and a break above this level would signal a test of the 116.85 50-point pivot, which targets 116.35 and 117.35.
The pair has initial support at 115.00. Below 114.50, strong support is at 114.20 from a 50-point pivot, which targets 113.70 and 114.70.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Mixed to slightly bearish
LONG-TERM: Bearish
Sterling/dollar
The still overbought sterling/dollar fell on Thursday, but the pair remains stuck in last Friday’s range. It’s still overbought in the short term and in the medium term, so the risk is on the downside.
Immediate support is now seen at 1.8850. Strong support follows at 1.8815. Distant support is at 1.8715.
Above 1.8970, cable has resistance at 1.9030. Next level is 1.9100. That’s followed by 1.9235 from a Gann extension level.
Oscillators are mixed.
NEAR-TERM: Mixed with downside risk
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss rallied to a near two-week high and the outlook is cautiously positive.
Above 1.2385, resistance follows 1.2425. Distant resistance is at 1.2526.
Initial support is at 1.2320. The next level is at 1.2245. Below 1.2190, the pair has support pegged at 1.2090, which is also the target of a double top formation.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Mixed slightly bearish
LONG-TERM: Bearish
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