[B]Forex Market Commentary for April 18, 2007 by Cornelius Luca[/B]
GFT Daily Forex Market Commentary
The pound vaulted over $2 for the first time since September 1992 after the U.K. CPI unexpectedly accelerated to 3.1% in March on a yearly basis, the fastest pace in a decade. The inflation rate is over one percent above the Bank of England’s 25% target, requiring Governor King to write a letter of explanation. This strongly suggests that the BoE will hike interest rates. The dollar should attempt to bounce today.
Euro/dollar
Euro/dollar rallied to a new 2 ½ year-high on Tuesday before peaking and heading lower to close little changed. Again, all the signs are here for a bearish reversal, but don’t sell this overbought pair unless it’s confirmed.
Initial resistance is at 1.3594 from the day high. Next level remains 1.3620. Above 1.3705, distant resistance is at 1.3805.
Immediate support is at 1.3524. Below 1.3470 there is support at 1.3440. Distant support is at 1.3390.
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen managed fell sharply and formed a bearish reversal after the pivot at 119.65 held with a little slippage. It’s close to the bottom of its rising channel, so its next move is dependant on its behavior at 118.65.
Below 118.65 support remains at 118.25 from a 50-point pivot that targets 117.75 and 118.75.
Above 119.10, strong resistance is at 119.65 from a 50-point pivot that targets 119.15 and 120.15. Above 120.15 resistance is seen at 120.75.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Slightly bullish
LONG-TERM: Bullish
Sterling/dollar
Sterling/dollar surged to a 15-year high on Tuesday after the high CPI report and the psychological 2.0000 level went up in flames. The pair is heavily overbought after rising for six consecutive days, but some additional strength may linger today.
Initial resistance is between 2.0140 and 2.0155. If this area breaks, the pound would likely take attack a Gann level at 2.0200.
Immediate support is at 2.0220. This is followed by 1.9975. Below 1.9955, strong support follows at 1.9925.
Oscillators are rising.
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss franc traded failed to recover on Tuesday and took another dive. The outlook is mixed with risk on the upside.
Immediate support is at 1.2063. Below it there is a key level at 1.2030. Dollar/Swiss franc then has strong support at 1.2000.
Initial resistance comes at 1.2115. Next level is at 1.2165. Above 1.2230, the next level is 1.2290. Distant resistance is at 1.2370.
Oscillators are declining.
NEAR-TERM: Mixed
MEDIUM-TERM: Slightly bearish
LONG-TERM: Slightly bearish