GFT Daily Forex Market Commentary

[B]Forex Market Commentary for February 5, 2007 by Cornelius Luca[/B]

GFT Daily Forex Market Commentary

The non-farm` payrolls report, mixed as it was, did not disappoint in terms of generating high volatility. When the dust settled Friday afternoon, the dollar was up across the board – except against the pound. The carry trades remain under relative pressure going into the low level G7 meeting on Friday. Following a minor pull back, the US currency should attempt to add to its gains.

Euro/dollar

Euro/dollar reversed early gains on Friday and slumped sharply, as expected. It must exit the 38.2% to 61.8% consolidation area (1.2825 to 1.3030) to attract new positions.
Immediate support is at 1.2950. Below 1.2920 there are two pivotal lows at 1.2882 and 1.2868.
Above the four-week high of 1.3064, which was coined on Friday, the pair has immediate and strong resistance at 1.3080. This level marks the middle of the downmove between January 2 and 12, and a close above it would signal a further upmove to the resistance at 1.3130.
Oscillators are mixed.

NEAR-TERM: Mixed with bearish bias
MEDIUM-TERM: Mixed
LONG-TERM: Bullish

Dollar/yen

Dollar/yen rallied on Friday, but with the G7 fin mins’ meeting on Friday and Saturday, expect more noise and little follow through. The risk is on the downside, with all the carry trade liquidation talk, but only a close below 120.00 would increase the odds of a more sustained decline.

The pair has immediate support at 121.05 from a 50-pip pivot, which targets 121.55 and 120.55. Below 119.95, dollar/yen retains good support at 119.65 from a 50-pip pivot, which targets 120.15 and 119.15.

Initial resistance is at 121.55. Above 121.87, which is the high in March 2003, resistance remains at 122.50 from a 50-point pivot, which targets 122.00 and 123.00.
Oscillators are mixed.

NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bullish

Sterling/dollar

Sterling/dollar was the exception to the rule on Friday, and the rule was: dollar up. It traded sideways and closed little changed. Again, the pair needs more information before a new direction ensues.
There is support at 1.9585. A break above this level would signal a re-test the pivotal low at 1.9483.
Initial resistance is at 1.9750. If this Fibonacci retracement level gives way, then the pound would challenge the next level 1.9822.
Oscillators are mixed.

NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Mixed

Dollar/Swiss franc

Dollar/Swiss franc reversed early losses on Friday and rallied enough to erase half of the losses made since Wednesday. The gains were in line with expectations. Following a light pull back, expect another attack higher.

Above 1.2565, resistance comes at 1.2660 from the target of a bull flag. Next level is 1.2720.
Immediate support comes at 1.2430. Then, there is support at 1.2375. Strong support follows at 1.2330.

Oscillators are mixed.

NEAR-TERM: Mixed
MEDIUM-TERM: Mixed
LONG-TERM: Bullish