[B]Forex Market Commentary for May 10, 2007 by Cornelius Luca[/B]
GFT Daily Forex Market Commentary
The dollar struggled higher versus the majors on Wednesday after the Fed made it clear it may hike rates again to deal with the stubborn inflation. Only the pound ended higher ahead of 25-basis point rate hike on Thursday. The dollar should consolidate today.
Euro/dollar
The euro/dollar traded sideways on Wednesday after reaching a four-week low on Tuesday. The weak closing 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 remains 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: Mixed
LONG-TERM: Bullish
Dollar/yen
Dollar/yen traded sideways in an inside ranged to close virtually unchanged on Wednesday as well. It should terad water 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
MEDIUM-TERM: Mixed
LONG-TERM: Bullish
Sterling/dollar
Sterling/dollar reduced early gains but still closed higher on Wednesday ahead of the Bank of England 25-basis point rate hike. Only a 50-basis point rate hike would probably vault the pound above the 2.0000 barrier, but this is very unlikely.
Initial resistance is still seen at 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.
Immediate support is at 1.9890. A close below the 1.9845.level would signal trouble for the uptrend. It would then challenge the 1.9800 area.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Mixed
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss franc consolidated on Wednesday in an inside range and above the resistance of its declining trendline. Following some further consolidation, it should plow higher in the coming days.
Initial resistance remains 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 still 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
MEDIUM-TERM: Mixed
LONG-TERM: Slightly bearish