GFT Daily Forex Market Commentary

GFT Daily Market Commentary

The dollar fell sharply versus the European currencies but rallied against the yen on Tuesday following the slightly less expected move by the Federal Reserve. The Fed succumbed to market pressures and cut its rate by 50 bps to 4.75 percent to slow down the decline of the economy into a recession started by fallout the housing-market collapse. This was the first cut in four years and the somewhat surprisingly wide cut propelled the US equities. Does it mean Fed Chairman Bernanke slowly learned how to emulate Greenspan? As I have been saying for the past few days, carefully hold long crosses against the yen. The euro/sterling is overbought and there is a good chance it will fall sharply here.


The euro/dollar surged to a new all-time high on Tuesday in the wake of the Fed move. The overbought pair reached a significant Gann level and some pullback on profit taking is likely. However, sell only on a stop loss basis.

Above 1.4000, resistance comes at 1.4085. Distant resistance is seen at 1.4135. Further resistance is pegged at 1.4278.

Below 1.3927, euro/dollar now has support at 1.3870. This is followed by 1.3830. Only a break below 1.3745 would signal the start of a downmove.

Oscillators are rising.

NEAR-TERM: Mixed with downside bias
LONG-TERM: Bullish


Dollar/yen rallied to a two-week high on a move led by euro/yen and carry trades. The close above 115.80 signals further strength.

Strong resistance is still seen at 117.10. Above 117.85 there is distant resistance at 118.80.

Strong support is at 115.50 from a 50-point pivot, which targets 115.00 and 116.00. Distant support follows at 114.20 from another 50-point pivot that targets 113.70 and 114.70.

Oscillators are rising.

NEAR-TERM: Mixed to slightly higher


The Fed mammoth rate cut forced the sterling/dollar to reverse from its lowest level since August 22 and close sharply higher on Tuesday. The rally vaulted cable from below 2.0000 to above 2.0100. The rally should decelerate and the pair should consolidate.

Above 2.0150, strong resistance follows at 2.0220. Next level is 2.0270. Distant pivotal resistance is at 2.0366.

Immediate support is now seen at 2.0050. A break below 2.0015 would signal a further slide to 1.9945. Below 1.9880 there is distant support at 1.9775.

Oscillators are mixed.

LONG-TERM: Bullish

Dollar/Swiss franc

The oversold dollar/Swiss fell further on Tuesday. As expected for a few days, following a brief bounce the sell-off should continue . Another pattern like this should be seen here.

Immediate support is now at 1.1797. Below it, support is seen at 1.1788 and then at 1.1740 from a pivotal low. Distant support is at 1.1715

Initial resistance is at 1.1845. Next level remains at 1.1924. Above it, resistance is at 1.1970. Distant resistance comes at 1.2025.

Oscillators are edging lower.

MEDIUM-TERM: Slightly bearish
LONG-TERM: Bearish

By: Cornelius Luca, Currencies Analyst, GFT
Visit GFT to learn more

DISCLAIMER: This forum and the information provided here should not be relied on as a substitute for extensive independent research before making your investment decisions. Global Forex Trading is merely providing this column for your general information. The views of the author are not necessarily those of Global Forex Trading, its owners, officers, agents or employees. In addition, any projections or views of the market provided by the author may not prove to be accurate. Global Forex Trading and Cornelius Luca will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this column. Global Forex Trading and Cornelius Luca do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.