[B]Forex Market Commentary for February 21, 2007 by Cornelius Luca[/B]
GFT Daily Forex Market Commentary
The dollar rallied versus the yen, euro and francs but slipped against the pound on Wednesday. All eyes will be on the BoJ’s decision on whether to hike (or actually double) its minute 25-bps borrowing costs. While the BoJ holds the key to the next move, the dollar should edge higher, especially after the dollar/Swiss failed to buckle under the pressure from a head-and-shoulders pattern.
Euro/dollar
Euro/dollar on Tuesday fell from the highest level since early this year. This reversal suggests a push lower today.
Immediate support is at 1.3115. Next level remains 1.3080. Below 1.3030 there is support at 1.2985 and 1.2940. There are two distant pivotal lows at 1.2882 and 1.2868.
Initial resistance is at 1.3160. Above 1.3200, the euro/dollar should challenge the pivotal 1.3296 area.
Oscillators are rising.
NEAR-TERM: Mixed with downside bias
MEDIUM-TERM: Mixed
LONG-TERM: Bullish
Dollar/yen
Dollar/yen struggled higher on Tuesday as well. This means that the double top that targets 117.80 remains is under pressure. Of course, all eyes are on the BoJ early Wednesday to see whether it is allowed to hike rates. If it does, the pair will tumble
Initial support is at 119.65 from a 50-pip pivot, which targets 120.15 and 119.15.119.15. Dollar/yen then has support at 118.25 from another 50-point pivot that targets 117.75 and 118.75.
Immediate resistance is at 120.15. Above 120.55 there is resistance at 121.05 from a 50-pip pivot, which targets 121.55 and 120.55.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Sterling/dollar
Sterling/dollar recovered further on Tuesday but there is little reason (outside the euro/sterling cross) to expect much more strength here.
Initial resistance is at 1.9585. This level must break if a further correction may ensue. Next level is 1.9635. Further resistance looms at 1.9676 from a pivot high.
Immediate support is at 1.9505. A break below the key 1.9445 level would signal a test of 1.9390.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Dollar/Swiss franc
Dollar/Swiss franc hit a new 1 ½-month low on Tuesday, and the subsequent correction was aggressive. The head-and-shoulder pattern, which targets 1.2190, is in danger.
Initial resistance is now seen at 1.2390. Above 1.2425, resistance remains at 1.2510. There is a pivotal high level is 1.2570.
Immediate support is now seen at 1.2313. Below 1.2285 there is support at 1.2220, but this level should not be seen.
Oscillators are edging lower.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Bullish