Forex Market Commentary for January 31, 2008 by Cornelius LucaGFT Daily Market Commentary
The dollar initially plunged after the Federal Reserve met the market expectations and lowered its funds rate by 50 bps to 3% for a total 125 bps in nine days, but the market came back to its senses and helped the US currency recover a little. This recovery should continue today.
Euro/dollar
Euro/dollar nailed its third highest level ever before trimming late gains on Wednesday. Choppy to lower trading is now likely on Thursday, as the explosive rally after the US rate cut was overdone.
Immediate support is still seen at 1.4800. The next level is 1.4755. Only a break below 1.4710 would signal a more sustained decline and then 1.4640 could be revisited.
Initial resistance comes at 1.4870. Above this level, there are pivotal highs at 1.4990 and 1.4966.
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen reversed early gains to close down on Wednesday. The slide was overdone, so the upside looks guardedly attractive for a quick trade.
Immediate resistance is at 106.80. The next good level is 107.30. Above it, strong resistance remains at 107.95 from a 50-point pivot that targets 107.45 and 108.45.
Initial support comes at 106.00. Strong support follows at 105.50 from a 50-point pivot, which targets 115.00 and 116.00. Distant support lies at 104.25.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Bearish
Sterling/dollar
Sterling/dollar fell from its highest level of the year to form an apparent bearish reversal formation, but more confirmation is needed. This would come from a break below 1.9766 and this is really far away. The risk remains on the downside.
Immediate support is at 1.9800. Below 1.9766, good support comes at 1.9720. Below 1.9680, there is further support at 1.9630. The next level is at 1.9430. Distant support is pegged at 1.9338.
Initial resistance is at 1.9885. This is followed by 1.9960. Distant resistance is now seen at 2.0034.
Oscillators are rising.
NEAR-TERM: Mixed with downside risk
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Dollar/Swiss franc
Dollar/Swiss continued to trade one day up and one day down, and Wednesday was a massive down day. The pair sank to a new record low, but nobody in Washington cares. The pair remains oversold, so some brief pullback is likely.
Initial resistance comes at 1.0885. The next levels are 1.0945 and 1.0990. Distant resistance is now seen at 1.1135.
Immediate support comes at 1.0812. This is followed by 1.0760.
Oscillators are declining.
NEAR-TERM: Mixed with upside risk
MEDIUM-TERM: Bearish
LONG-TERM: Bearish