Monday’s forex market commentary
The dollar marched further down on Friday and is no longer overbought. However, this decline seems overdone, so the risk is on the upside. Monday should see the dollar higher.
Euro/dollar
The euro/dollar rallied further on Friday and erased all of the losses made last week. It recovered half of the losses made in June, but remains in a mildly declining medium-term channel. If it is to continue, the 1.2800 level must hold on a closing basis.
Immediate support is at 1.2580. A close below this level would signal a test of the support at 1.2500.
For now, the close above 1.2680 spells more strength. Initial resistance looms at 1.2720, which marks half of the choppy downmove between June 5 and July 19. Next significant level is 1.2780, which is a Fibonacci retracement level.
Oscillators are rising.
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Mixed
LONG-TERM: Bullish
Dollar/yen
Dollar/yen fell to a one-week low of 115.80 on Friday before trimming losses. Its inability to challenge the strong support at 115.50 infers an attempt to extend its rising channel during this week.
Good resistance is seen at 116.70 and nearby at 116.85 from another 50-point pivot, which targets 116.35 and 117.35.
The pair has good initial support at 115.80. Strong support remains at 115.50, from a 50-pip pivot, which targets 116.00 and 115.00.
Oscillators are mixed.
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Bearish
Sterling/dollar
Sterling/dollar rose further to reach a 1 ½-month high of 1.8596 on Friday. The strength seems overdone, so cable should decline.
Immediate support is at 1.8520. Below 1.8450, the pound has support at 1.8375
Above 1.8560, resistance is at 1.8618. Good resistance follows at 1.8670. There is a bullish flag unfolding and its target is 1.8700.
Oscillators are rising.
NEAR-TERM: Mixed to slightly bearish
MEDIUM-TERM: Bearish
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss franc fell further on Friday to close the week virtually unchanged. The medium-term outlook remains positive, though.
Above 1.2425, resistance is seen at 1.2455. That’s followed by 1.2540.
Support is pegged at 1.2350. That’s followed by 1.2275 and 1.2230. There is a pivotal low at 1.2182.
Oscillators are mixed.
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Bearish
Monday, July 24, 2006 8:00 GMT
Daily Forex Market Commentary
By: Cornelius Luca, Currencies Analyst, GFT
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