Thursday’s forex market commentary
The dollar followed divergent paths on Wednesday as the market consolidated ahead of the ECB rate hike on Thursday. It closed higher against the euro and the franc, slipped versus the pound and closed pretty much flat against the yen. The overall outlook remains negative for the US currency, while Thursday should be a choppy day with upside bias.
Euro/dollar
The euro/dollar fell from a new high for the uptrend and closed lower on Wednesday. The pair is now overbought, but wait for the expected ECB rate hike before taking any action. The rate hike should be priced in, but look for the comments.
Initial support is at 1.2740. Below this level there is support pegged at 1.2718. Distant support is at 1.2650.
Immediate resistance is at 1.2800 and that’s followed by 1.2834. Further resistance looms at 1.2862 from a pivot high. If this level gives way, then look for a test of 1.2920. There is a distant second pivot high at 1.2979.
Oscillators are rising.
NEAR-TERM: Mixed to slightly bearish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen experienced further choppy trading on Wednesday, as expected, and closed unchanged. Expect more choppy trading today.
The pair retains initial support nearby at 114.45 and that followed at 114.20 by a 50-point pivot, which targets 113.70 and 114.70.
Above 114.85, good resistance remains seen at 115.50, from a 50-pip pivot, which targets 116.00 and 115.00.
Oscillators are edging lower.
NEAR-TERM: Mixed
MEDIUM-TERM: Mixed to slightly bearish
LONG-TERM: Bearish
Sterling/dollar
Sterling/dollar marched higher on Wednesday to reach its highest level in two months. The pair is overbought here, so the risk is on the downside.
Support remains at 1.8715 and that’s followed closely at 1.8680. Further support is seen at 1.8630. Below 1.8595, there is support is at 1.8550 and then at 1.8500.
Initial resistance is seen at 1.8780. Next resistance looms at 1.8830. Then, there is significant resistance at 1.8876 from a pivot high. Distant resistance lies in waiting at a distant 1.9024.
Oscillators are rising.
NEAR-TERM: Mixed to slightly bearish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss franc reversed some of Tuesday’s losses, when it had fallen to a 17-day low of 1.2278. The medium-term outlook is bearish, but in the short term the pair should recover slightly.
Resistance is now seen at 1.2335, but only a break above 1.2350 would signal that the pair had bottomed and will make a more substantial recovery. There is further resistance at 1.2405 and then at 1.2465.
Below 1.2280 there is support at 1.2230 and then at 1.2182. Distant support comes at 1.2065.
Oscillators are declining.
NEAR-TERM: Mixed to slightly bullish
MEDIUM-TERM: Mixed to slightly bearish
LONG-TERM: Bearish