Forex Market Commentary for July 23, 2007 by Cornelius LucaGFT Daily Forex Market Commentary
The dollar fell on Friday and early Monday as more traders threw in the towel on concern about the impact of the subprime exposure of the big financial players on earnings, investments and consumer pending. But the heavily oversold US currency managed to find its footing and should consolidate today.
Euro/dollar
The euro/dollar climbed further up early Monday to a new high for the uptrend, but then reversed gains. Still, continue holding long positions and take profit only a stop. It’s overbought in both the short and medium terms, but sell it only on a confirmed decline. If that happens, the slide should be quite aggressive.
Support comes first at 1.3780. Next level is at 1.3740 and only a break below 1.3705 would signal a more sustained decline
Resistance comes at 1.3796. If the euro/dollar manages to defy gravity further, then look for a test of the resistance at 1.3900 and even the 1.4000 area, even though profit taking and barrier defense should not allow it.
Oscillators are rising.
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen collapsed to a 1 ½-month low and there is some threat of liquidating yen crosses. It even threatened to form a head-and-shoulders pattern, but it needs a close below the neckline at 121.16. Mild selling pressure should continue early this week. Key level early this week is 121.05, a 50-point pivot, which targets 120.55 and 121.55.
Initial support is at 120.72. A break below this area would encourage a test of 119.65. Further support is at 119.15. The target of the bearish reversal pattern would be at around 118.00.
Resistance is first seen at 121.55. Only a break above 122.15 would signal a more aggressive recovery to 122.50, which is a 50-point pivot, which targets 122.00 and 123.00
Oscillators are falling.
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Sterling/dollar
Sterling/dollar surged to a new 26 ½ year high early on Monday. It reached the channel line of an uptrend rising since March and is heavily overbought. Hold long positions and sell it only a stop-loss order basis.
If the channel line at 2.0620 gives way, then resistance will emerge immediately at 2.0645. The next level looms at 2.0765. Distant resistance is at 2.0845.
If the resistance from the channel line holds, then look for an initial decline to 2.0480. A break below this level would signal a slide to 2.0400. Only a close below 2.0360 would increase the odds that pound has actually peaked.
Oscillators are rising.
NEAR-TERM: Bullish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss franc fell from the highest level since July 12 to close down on Friday. However, it’s trading one day up and one day down, and today is the up day. But not for long, as it remains soft near the new low of the downtrend.
Initial resistance is at 1.2066. Next cap is at 1.2140. It would take a break above this level to increase the odds that a significant low is in place.
Immediate support is at 1.1983. Strong support is at 1.1962. If this pivotal low gives way, then the downtrend is rejuvenated and dollar/Swiss should challenge 1.1835.
Oscillators are falling.
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bearish
LONG-TERM: Bearish