[B]Forex Market Commentary for February 6, 2007 by Cornelius Luca[/B]
GFT Daily Forex Market Commentary
With the low level G7 meeting scheduled for Friday and Saturday, which offers the possibility of bashing the yen, the trade of the week should be short euro/yen. This trade already worked out well on Monday. Thus, the US currency should attempt to add to its gains against the European currencies and remain under pressure versus the yen.
Euro/dollar
Euro/dollar followed the expected bearish path on Monday, when it hit a one-week low, but must still exit the 38.2% to 61.8% consolidation area (1.2825 to 1.3030) to attract new positions.
Immediate support is at 1.2913, which was the low on Monday. Then, there are two pivotal lows at 1.2882 and 1.2868.
Initial resistance is at 1.2970. The next cap is 1.3030. Above the four-week high of 1.3064, which was reached on Friday, the pair has strong resistance at 1.3080.
Oscillators are declining.
NEAR-TERM: Mixed with bearish bias
MEDIUM-TERM: Mixed
LONG-TERM: Bullish
Dollar/yen
Dollar/yen and euro/yen slumped on Friday, as the market is eying the G7 fin mins’ meeting on Friday and Saturday. The meeting is unlikely to achieve the expected bashing of the yen, but the market is hoping. The risk remains on the downside, due to liquidation of some carry trade, but only a close below 120.00 would increase the odds of a more sustained decline.
Below 119.95, dollar/yen retains good support at 119.65 from a 50-pip pivot, which targets 120.15 and 119.15.
The pair has immediate resistance at 121.05 from a 50-pip pivot, which targets 121.55 and 120.55. Above 121.87, which is the high in March 2003, resistance remains at 122.50 from a 50-point pivot, which targets 122.00 and 123.00.
Oscillators are declining.
NEAR-TERM: Mixed to slightly bearish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Sterling/dollar
Sterling/dollar managed to reduce losses on the close on Monday, thus failing to break the tip of a triangle – but the end is near. Once again, the pair needs more information before a new direction ensues.
There is immediate support at 1.9570. A break above this level would signal a decline to 1.9534 and a re-test of the pivotal low at 1.9483.
Initial resistance is at 1.9655. The next level is 1.9705. If the 1.9750 Fibonacci retracement level breaks, then the pound would challenge the next level 1.9822 – but this is very unlikely.
Oscillators are declining.
NEAR-TERM: Mixed to slightly bearish
MEDIUM-TERM: Bullish
LONG-TERM: Mixed
Dollar/Swiss franc
Dollar/Swiss franc marched higher on Monday, but ended with only small gains. Following a light pull back, expect another attempt to advance.
Initial resistance is at 1.2517. Above 1.2565, resistance comes at 1.2660 from the target of a bull flag. Next level is 1.2720.
Immediate support comes at 1.2450. Then, support remains at 1.2375. Strong support follows at 1.2330.
Oscillators are mixed.
NEAR-TERM: Mixed to slightly higher
MEDIUM-TERM: Mixed
LONG-TERM: Bullish