[B]Forex Market Commentary for February 7, 2007 by Cornelius Luca[/B]
GFT Daily Forex Market Commentary
On Tuesday, the dollar recouped losses against the yen after Treasury Secretary Paulson lessened speculation that yen weakness will be singled out in the G7 meeting this week. But the US currency slumped versus the European currencies. The Swiss franc gained the most after SNB’s Hildebrand warned of inflation risk and called for rate tightening. Focus on the yen crosses and the oversold euro/Swiss cross, as the dollar is not as clear as it should.
Euro/dollar
Euro/dollar reversed losses incurred on Friday and Monday, but must still exit the 38.2% to 61.8% consolidation area (1.2825 to 1.3030) to attract new positions. The initial bias is bullish.
Initial resistance is at 1.3030. Above the four-week high of 1.3064, which was reached on Friday, the pair has strong resistance at 1.3080.
Immediate support is at 1.2945. That is followed by1.2913, which was the low on Monday. Then, there are two pivotal lows at 1.2882 and 1.2868.
Oscillators are declining.
NEAR-TERM: Mixed
MEDIUM-TERM: Mixed
LONG-TERM: Bullish
Dollar/yen
Dollar/yen fell on Tuesday, as expected, but it wasn’t an easy decline. With all eyes on the G7 fin mins’ meeting on Friday and Saturday, the pair encountered a brief recovery after Treasury’s Paulson seemed to have taken the yen of the “to do” list. Once again, the risk remains on the downside, after the pair fell below 120 for the first time since January 11. A close below 120.00 would increase the odds of a more sustained decline, as it would trigger a head-and-shoulders formation.
The pair has good support at 119.65 from a 50-pip pivot, which targets 120.15 and 119.15.
Immediate resistance looms at 120.55. The pair is then capped at 121.05 by a 50-pip pivot, which targets 121.55 and 120.55. Above 121.87, the peak of 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 again to break the tip of a triangle on Tuesday, when it rallied aggressively to reverse Monday’s losses. The recovery was helped by a strong retail sales report. Again, the pair needs more information before a new direction ensues.
There is immediate support at 1.9660. A break below the 1.9570 level would signal a decline to 1.9534, but this is unlikely.
Initial resistance is at 1.9750. If this Fibonacci retracement level breaks, then the pound would challenge the next level 1.9822 – but this is very unlikely.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Mixed
Dollar/Swiss franc
Dollar/Swiss franc fell sharply on Tuesday and it is now hard press to attempt an advance.
Immediate support now comes at 1.2375. Then, support remains at 1.2330. Strong support follows at 1.2285.
Initial resistance is at 1.2430. Above 1.2475, resistance comes at 1.2515. Distant pivotal resistance is at 1.2575.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Mixed
LONG-TERM: Bullish