[B]Forex Market Commentary for May 28, 2007 by Cornelius Luca[/B]
GFT Daily Forex Market Commentary
The soft report on existing home sales hurt the dollar versus the European currencies ahead of the long weekend. Dollar/yen slipped early on the day as well amid profit taking on carry trades, but news that the belligerent North Korea had a missile test helped it reverse the initial losses. The US currency remains overbought in the short term, so it should correct lower. But Monday should be very quiet.
Euro/dollar treaded water on Friday and should so the same today – but in a tighter range.
The pair must dig below 1.3410 to warrant more weakness. If this level breaks, look for a test of the support at 1.3375. Below this the Fibonacci retracement level there is support at 1.3275.
If 1.3410 holds, look for a rally to 1.3530. A close above 1.3545 would signal another attack on the upside to 1.3610.
Oscillators are declining.
Dollar/yen rallied from a one week low to a 3 1/2-month high of 121.89 on Friday and the medium-term outlook remains bullish.
Above 121.89 there still is resistance at 122.18. Next resistance comes at 122.50 from another 50-point pivot.
Key support level this week is at 121.05 from a 50-point pivot, which targets 120.55 and 121.55. Below 120.00, strong support comes at 119.65 from another 50-point pivot that targets 119.15 and 120.15.
Oscillators are rising.
Sterling/dollar traded sideways in a tight range on Friday as well. It failed to break the top of its declining channel, so the pound should struggle lower. Short-term positions are long, so some long liquidation is likely.
Initial support is at 1.9790. Below 1.9715 there still is good support at 1.9655.
Strong resistance is still seen at 1.9900 from the top of its declining channel. If this level breaks, then look for a rebound to 1.9960. Above 2.0000 there is distant resistance at 2.0140.
Oscillators are mixed.
Dollar/Swiss franc consolidated on Friday, as expected. The medium-term outlook remains positive, but the pair should tread water today as well.
Immediate support is at 1.2240. This is followed by 1.2210. Below 1.2170, distant levels are 1.2095 and 1.2065.
Above the resistance at 1.2332 there is good resistance at 1.2370. Next target is 1.2437. Distant resistance looms at 1.2554.
Oscillators are rising.
LONG-TERM: Slightly bearish