GFT Daily Forex Market Commentary

[B]Forex Market Commentary for July 2, 2007 by Cornelius Luca[/B]

GFT Daily Forex Market Commentary
The dollar collapsed versus the European currencies on Friday and then early on Monday on demand for carry trades and amid light volume at the end of the second quarter. Following a mild pullback, the European currencies should attempt to advance further against the dollar and the yen. Dollar/yen didn’t react to news that the Tankan business survey, showed confidence among large manufacturers was unchanged at 23 points in the second quarter and near the fourth quarter’s two-year high of 25. The strong Eurozone PMI report was in line with the rallying European currencies. The US agenda opens with the release of the ISM manufacturing report for June.

Euro/dollar

Euro/dollar surged on Friday to a 1 ½-month high, surpassing the target of a bullish flag at 1.3550. The short-term and the medium-term outlooks are positive.
Immediate resistance is seen at 1.3605. A close above this level would signal another aggressive attack on the upside to 1.3679.

Initial support is at 1.3563. Next levels are 1.3505, 1.3480 and 1.3440.
Oscillators are rising.

NEAR-TERM: Bullish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish

Dollar/yen

Dollar/yen held its own on Friday, but fell on Monday. It should attempt to slow down its decline today.
Key support comes at 122.50 from another 50-point pivot, which targets 122.00 and 123.00.
Immediate resistance is at 123.00. Next level is 123.55. Above it, strong resistance is seen from a 50-point pivot at 124.00 that targets 123.50 and 124.50.
Oscillators are mixed.

NEAR-TERM: Bearish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish

Sterling/dollar

Sterling/dollar surged to a 2 ½-month high of 2.0075 on Monday. The medium-term outlook is bullish ahead of the rate hike on Thursday.
Above 2.0075, resistance remains between 2.0131 and 2.0151.

Immediate support is seen at 2.0020. If the 1.9940 level gives way on a closing basis, look for further support at 1.9910.

Oscillators are rising.

NEAR-TERM: Bullish
MEDIUM-TERM: Bullish
LONG-TERM: Bearish

Dollar/Swiss franc

Dollar/Swiss franc fell to a 1 ½-month low and formed a bearish reversal formation, which targets the 1.2100 area. The outlook is bearish.

Immediate support is seen at 1.2100. Strong supports follow soon at 1.2065 and 1.2030.

Initial resistance is at 1.2175. Next level is 1.2250. Distant resistance is at 1.2310.
Oscillators are falling.

NEAR-TERM: Bearish
MEDIUM-TERM: Bullish
LONG-TERM: Mixed