GFT Daily Forex Market Commentary

The dollar rallied further versus the pound on Monday in the wake of the Northern Rock situation, even though the UK entity said it had not yet drawn any funds from an emergency facility from the Bank of England. The dollar marked time otherwise on Monday, as all eyes are on what will the Fed will do today: cut the discount rate, and if so only 25 basis points, cut the Fed funds, and if so by 25 basis points? I ll have to go with the latter. Thus, once again, carefully hold long crosses against the yen and short crosses versus the pound.

Euro/dollar

The euro/dollar made little progress on Monday as well, as the overbought pair didn t form a bearish reversal. The downside is still favored.

Below 1.3840, euro/dollar now has support at 1.3790. This is followed by 1.3720 and 1.3635. Only a break below 1.3600 would signal the start of a downmove.

Initial resistance is seen at 1.3927. Next resistance is pegged at 1.3955. Above 1.4000 there is distant resistance at 1.4085.

Oscillators are rising.

NEAR-TERM: Mixed with downside bias
MEDIUM-TERM: Bearish
LONG-TERM: Mixed

Dollar/yen

Dollar/yen did nothing on Monday, and the upmove seems limited. Only a close above 115.80 signals further strength.

Strong resistance is still seen at 115.50 from a 50-point pivot, which targets 115.00 and 116.00. Distant resistance is at 117.10.

Strong support is at 114.20 from another 50-point pivot that targets 113.70 and 114.70. Distant support follows at 112.90 from a 50-point pivot that targets 113.40 and 112.40.

Oscillators are mixed.

NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Mixed

Sterling/dollar

Sterling/dollar fell further on Monday following the credit problem for Northern Rock, which required, but not used, emergency funding from the Bank of England. Further weakness is likely.

Immediate support is now seen at 1.9830. A break below this level would signal a further slide to 1.9775. Below 1.9740 there is distant support at 1.9655.

Above 2.0055, strong resistance follows at 2.0100. Distant resistance is at 2.0150.

Oscillators are falling.

NEAR-TERM: Slightly bearish
MEDIUM-TERM: Slightly bearish
LONG-TERM: Bullish

Dollar/Swiss franc

The oversold dollar/Swiss marked time in an inside range on Monday. Following a brief bounce the sell-off should continue.

Immediate support is still in place at 1.1855. Below 1.1803, support is seen at 1.1788 and ten at 1.1740 from a pivotal low. Distant support is at 1.1715

Initial resistance remains in place at 1.1924. Above it, resistance is at 1.1970. Distant resistance comes at 1.2025.

Oscillators are slightly bullish.

NEAR-TERM: Mixed with upside bias
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.