[B]Forex Market Commentary for May 9, 2007 by Cornelius Luca[/B]
GFT Daily Forex Market Commentary
Between news that the Japanese investors were repatriating part of the maturity and coupon payment of euros and the lack of official concern about the weakness of the Swiss franc, the euro and the franc fell on Tuesday. The dollar recouped losses against the yen and treaded water versus the pound. It should push higher today.
Euro/dollar
The fell to a four-week low on Tuesday and nearly confirmed the formation of a head-and-shoulders pattern, which targets 1.3380. Only a close below 1.3530 will confirm this formation.
Initial support is at 1.3518 from a short-term Fibonacci retracement level. Next level looms at 1.3468. A break below this level would accelerate the decline and the pair would target 1.3420 next. Then, of course, there is 1.3380.
If the neckline at 1.3530 holds, however, expect the euro/dollar to bounce to 1.3582. 1.3627 is the top of the right shoulder and further caps are at 1.3653 and 1.3683.
Oscillators are mixed.
NEAR-TERM: Mixed to slightly bearish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen recouped its early losses to close virtually unchanged on Tuesday. It should correct higher today.
Good support remains at 119.65 from another 50-point pivot that targets 119.15 and 120.15.
Resistance is still seen at 120.50 and 120.75. Distant resistance now comes at 121.05 from a 50-point pivot, which targets 120.55 and 121.55.
Oscillators are rising.
NEAR-TERM: Mixed to slightly higher
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Sterling/dollar
Sterling/dollar edged lower on Tuesday, but the Bank of England will likely hike rates on Thursday, so the downside looks limited.
Immediate support is at 1.9845. A close below this level would signal trouble for the Cable’s uptrend. It would then challenge the 1.9800 area.
Initial resistance is still seen at 1.9975. The next level is 1.9995. Above 2.0070, resistance remains between 2.0131 and 2.0151. If this area breaks, the pound would likely take attack a Gann level at 2.0200. Further resistance looms in the 2.0300 area, but this is very unlikely.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss franc rallied to the highest level since April 12 and the close above the resistance of its declining trendline signals further strength in the coming days.
Initial resistance is at 1.2195. If this level breaks, look for a test at 1.2215 from a Fibonacci retracement level. That’s followed by 1.2265 and 1.2285. Distant resistance is at 1.2350.
Support now comes at 1.2140. The next levels loom at 1.2100 and 1.2060. Distant support lies at 1.1995.
Oscillators are mixed.
NEAR-TERM: Mixed to slightly higher
MEDIUM-TERM: Slightly bearish
LONG-TERM: Slightly bearish