Daily Forex Market Commentary

GFT Daily Forex Market Commentary for December 20, 2006
Forex Market Commentary by Cornelius Luca, Currencies Analyst, GFT

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The dollar fell sharply versus the European currencies on Tuesday, but marked time against the yen, as the yen crosses surged. The European currencies are at critical points and their risk is on the upside.

One day after hitting a 25-day low of 1.3051, the euro/dollar rallied to recover half of the losses made between December 8 and 18. The rally was helped by a strong Ifo report. A significant peak should be in place, but the oversold pair could make a further rally today.

Above the strong 1.3250 level, euro/dollar has resistance at 1.3290. There is a pivotal high at 1.3367.

Initial support is at 1.3175. Only a break of the support at 1.3135 on a closing basis would signal that Tuesday’s rally was a fluke. Euro/dollar would then have support at 1.3050.

Oscillators are rising.

NEAR-TERM: Mixed with bullish bias
MEDIUM-TERM: Mixed with bullish bias
LONG-TERM: Bullish

Dollar/yen encountered further choppy trading and remained stuck in an inside range. The immediate outlook is mixed.

Below 117.75, there is support at 117.10. A break above this strong level would test the 50-point pivot at 116.85, which targets 116.35 and 117.35.

The pair has resistance at 118.75, which is the target of the 118.25 pivot. Next level is now the 50-point pivot at 119.65, which targets 116.15 and 120.15.

Oscillators are rising.

LONG-TERM: Bearish

Sterling/dollar rallied sharply on Tuesday and erased 61.8% Fibonacci retracement level of the downmove between December 4 and 18. This means the pair should now try to pad its gains today.

Initial resistance is at 1.9755. Above 1.98000, the pair has resistance from a pivotal high at 1.9846l.

Below 1.9640, the pound has support at 1.9590. Strong support follows at 1.9490.

Oscillators are rising.

NEAR-TERM: Mixed with bullish bias
MEDIUM-TERM: Mixed with bullish bias

Dollar/Swiss franc
Dollar/Swiss franc reversed all of the gains made on Friday and should attempt to plow further down today.

Immediate support is at 1.2070. That is followed by 1.2020 and 1.1985.

Above the Fibonacci retracement level at 1.2165, the pair has resistance at 1.2210 and 1.2265.

Oscillators are rising.

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

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