[B]Forex Market Commentary for March 12, 2007 by Cornelius Luca[/B]
GFT Daily Forex Market Commentary
The dollar rallied versus the majors on Friday after the US non-farm payrolls report came in stronger than expected. The demand for carry trades rekindled, and this spells out further strength versus the yen and the European currencies, but weakness against the commodity currencies.
Euro/dollar
Euro/dollar sank on Friday. On the downside, the weekly bearish candle is hiding a lot of noise and this suggests further directionless trading at least for a couple of days. On the plus side, the pair is approaching a fork in the road and soon there could be some nice fireworks.
Immediate support comes at 1.3090. Vital support follows at 1.3065 and a close below it would confirm a head-and-shoulders formation, which targets the 1.2885 area. Intermediate supports are pegged at 1.3030 and 1.2995.
Initial resistance is at 1.3135. Above 1.3188, the pair has strong resistance at 1.3240.
Oscillators are mixed to lower.
NEAR-TERM: Mixed with bearish bias
MEDIUM-TERM: Mixed with bullish bias
LONG-TERM: Bullish
Dollar/yen
Dollar/yen rallied aggressively from a 13-week low of 115.14 to close higher last week. Overcoming fears of carry trade unwinding wasn’t an easy feat and the pair swapped up and down days for the first four days of last week. Still, it managed to recover nearly half of the losses incurred since February 12 and after a little more step dancing it should attempt to advance. Dollar/yen should not surpass its trend high. Key level at least early in the week is at 118.25 from a 50-point pivot that targets 117.75 and 118.75.
Above 118.75, strong resistance is at 119.65 from another 50-point pivot that targets 119.15 and 120.15. Distant resistance is at 121.05 from another 50-point pivot that targets 120.55 and 121.55. There is a pivotal high at 122.18.
Initial support is at 117.75. The next level is at 116.85, from a 50-point pivot which targets 116.35 and 117.35.
Oscillators are rising.
NEAR-TERM: Mixed with bullish bias
MEDIUM-TERM: Bearish
LONG-TERM: Bullish
Sterling/dollar
Sterling/dollar edged higher on Friday but remained stuck in a double inside range. We still need more information.
Immediate support is at 1.9265. Below 1.9225, the pair should re-test its pivotal low at 1.9179.
Initial resistance is at 1.9360. Above 1.9425 the pair has distant resistance at 1.9520.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Dollar/Swiss franc
Dollar/Swiss franc surged on Friday as well to form a bullish reversal signal on a weekly basis. It broke out of the generally unreliable diamond formation and is now facing stiff resistance at its high from the 100-day moving average.
If this line at 1.2352 gives way, then the dollar should recover further to 1.2405. Above 1.2440, strong resistance comes at 1.2500.
If the average holds on a closing basis, dollar/Swiss franc should fall to test support at 1.2295. Below the strong support at 1.2220 there is a pivot low at 1.2110.
Oscillators are rising.
NEAR-TERM: Mixed with bullish bias
MEDIUM-TERM: Bearish
LONG-TERM: Bullish