Friday’s forex market commentary

The dollar recovered on Thursday after hitting lows for the move. The strong durable goods orders managed to help only later, but this remains a volatile number.

The euro/dollar made a further upmove early on Thursday, as expected, and reached a new high for the upmove at 1.2773 before reversing all of the gains.

The upside remains on track for as long as the support at 1.2675 holds, but it should come under pressure. A break below this level would signal a return to range trading and the pair would then test 1.2635. Further supports are at 1.2580 and nearby at 1.2560.

Initial resistance is at 1.2745. Strong resistance then follows at 1.2773 and 1.2800. There is a distant pivotal high at 1.2862.

Oscillators are rising.

LONG-TERM: Bullish

Dollar/yen made the expected decline on Thursday to erase nearly two thirds of the gains made between July 9 and 18, but then trimmed losses. The close above 115.70 encourages some more recovery today.

Above 116.00, good resistance remains at 116.85 from another 50-point pivot, which targets 116.35 and 117.35.

Strong support remains at 115.50 from a 50-point pivot, which targets 115.00 and 116.00.

Oscillators are edging lower.

NEAR-TERM: Mixed to slightly bullish
LONG-TERM: Bearish

Sterling/dollar rallied further early Thursday and hit the 1.8675 area before heading lower and giving up most of its gains. It’s half way through the upmove, so choppy trading is likely today.

Initial support is at 1.8540. Again, the key level has been 1.8500 over the past five days, so only a close below this level would signal another bout of sideways trading. If the weakness persists, then look for a test of the support in the 1.8440 area. Distant support is now seen at 1.8340.

Initial resistance is at 1.8620. A break above this level on a closing basis would signal a further upmove to 1.8630 and probably 1.8675. Distant resistance is at 1.8750.

Oscillators are mixed.

LONG-TERM: Bullish

Dollar/Swiss franc
Dollar/Swiss franc fell further early on Thursday and reached 1.2306 before trimming most of its losses. It bounced off of the declining channel, so more choppy trading is likely today.

Initial support is now seen at 1.2350. That’s followed by 1.2306 and 1.2285. Distant support now looms at 1.2255.

Once again, for as long as the Fibonacci retracement level at 1.2445 holds, the pair remains under selling pressure. If the strength persists, then look for a test of 1.2520 and 1,2540. Distant resistance is now provided by the pivotal high at 1.2594.

Oscillators are mixed.

LONG-TERM: Bearish

Friday, July 28, 2006 8:00 GMT
Daily Forex Market Commentary
By: Cornelius Luca, Currencies Analyst, GFT

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