Forex Market Commentary for March 18, 2008 by Cornelius LucaGFT Daily Market Commentary
Again, the dollar sank further on Monday against the low-yielding JPY, CHF and EUR, but rallied versus the high-yielding GBP, AUD and NZD. News that the Fed cut the discount rate by 25 bps to 3.25% and provide up to $30 billion to JPMorgan Chase to help it purchase of Bear Stearns accelerated volatility. Expect very choppy trading ahead of the expected Fed funds cut today. The market is looking for a bottom in the USD versus the JPY, CHF and EUR, and so do I.
Euro/dollar
Euro/dollar nailed a new record high on Monday before giving up most of its gains. My model remains long since February 14, but I prefer to reduce long positions, as the pair is very overbought. Maybe a peak is already in place.
Initial resistance is still at 1.5770. Above 1.5850, resistance now comes at 1.5904 and then at 1.5950.
Immediate support is at 1.5690. This followed by 1.5630. Below 1.5575, there is further support at 1.5535.
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen remains weak, despite recovering part of its aggressive losses made early Monday. My system is short, but it looks dangerous. I like only small short positions because the pair is very oversold.
Initial support comes from a 50-point pivot at 97.30, and this targets 96.80 and 97.80. Below it, distant support is at 95.75 and 95.30.
Immediate resistance is now seen at 97.90. 98.80 is next. Key level is at 99.25 from a 50-point pivot, which targets 98.75 and 99.75. This is followed by 100.25 from a 50-point pivot, which targets 99.75 and 100.75.
Oscillators are falling.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Bearish
Sterling/dollar
Sterling/dollar sank to an 11-day low after forming a bearish reversal on Friday. More weakness is likely today.
Immediate support is now seen at 1.9940. This is followed by 1.9880. Below 1.9765, the next level follows at 1.9690.
Initial resistance now comes at 2.0085. This is followed by 2.0155. A break above 2.0335 would signal another further rally to 2.0397.
Oscillators are rising.
NEAR-TERM: Mixed to slightly bearish
MEDIUM-TERM: Bullish
LONG-TERM: Mixed
Dollar/Swiss franc
Dollar/Swiss suffered another aggressive loss on Monday before trimming about half of its losses. The medium-term trend remains bearish, but a significant recovery may be close by. My model was remains short though.
Immediate support is still seen at 0.9800. Below 0.9750, support is now pegged at 0.9640. Distant support is at 0.9450.
Initial resistance now remains at 0.9925. This is followed by 0.9990 and 1.0045. The next level is 1.0090.
Oscillators are declining.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Bearish