Forex Market Commentary for July 30, 2007 by Cornelius LucaGFT Daily Forex Market Commentary
Unwinding of carry trades and standard crosses sent the European currencies lower but the yen gave back early gains on Friday. With the US indices under intense selling pressure, expect more of the same today.
Euro/dollar
The overbought euro/dollar fell sharply on Friday and along with previous losses on Wednesday it dropped 38.2% of the up leg since June 13. The decline was confirmed so you should be short – with a tight stop.
Support comes nearby at 1.3625 from the 38.2% Fibonacci retracement level of the June 13 – July 24 leg of the uptrend. Next level is at 1.3555.
Resistance now looms at 1.3702. Strong support follows at 1.3775. There is a pivotal high at 1.3853. Distant resistance is now pegged at 1.3935.
Oscillators are declining.
NEAR-TERM: Bearish
MEDIUM-TERM: Mixed
LONG-TERM: Bullish
Dollar/yen
Dollar/yen recovered from a 3 ½-month low but still reached the target of a head-and-shoulders pattern. Selling pressure should continue this week – if the market can penetrate the long-term trendline support at 108.00 and if it doesn’t overreact to the election losses of the incumbent party.
Initial support is 118.25 from a 50-point pivot that targets 117.75 and 118.75. Distant support looms at 115.50 from another 50-point pivot, which targets 115.00 and 116.00.
Above 119.20, resistance is seen at 119.65 from a 50-point pivot that targets 119.15 and 120.15.
Oscillators are falling.
NEAR-TERM: Mixed with bearish bias
MEDIUM-TERM: Bearish
LONG-TERM: Bullish
Sterling/dollar
The overbought sterling/dollar collapsed on Friday. It has already given up 38.2% of the leg of the uptrend between June 8 and July 24. Cable is still above 2.0000, so short positions look good, but choppy summer trading should not be forgotten.
Immediate support is at 2.0205. A break below this level would signal a further slide to 2.0135. Distant support is at 2…
If the resistance at 2.0205 breaks, then resistance will emerge at 2.0360 and the pound has not peaked. Further resistance is at 2.0430.
Oscillators are declining.
NEAR-TERM: Bearish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss franc continued to trade one day up and one day down and Friday was the up day. But the pair remained in an inside range. The upside is favored, but as of now, the medium term downtrend remains in place. Monday should see some weakness.
Immediate support is seen at 1.2040. Next level is 1.1983. Strong support follows at 1.1962. If this pivotal low gives way, then the downtrend is rejuvenated and dollar/Swiss should challenge 1.1835.
Initial resistance is at 1.2090. Next cap remains at 1.2140. It would take a break above this level to increase the odds that a significant low is in place.
Oscillators are mixed.
NEAR-TERM: Mixed with upside bias
MEDIUM-TERM: Bearish
LONG-TERM: Bearish