Forex Market Commentary for May 6, 2008 by Cornelius LucaGFT Daily Market Commentary
The dollar slumped on profit taking on Monday, despite a good non-manufacturing ISM report, after rallying late last week. With Tokyo and London, it is hard to gauge the significance of the move. But with my model long on the commodity currencies, there is a distinct risk for an across the board decline for the US currency.
Euro/dollar
Between late Friday and the full day on Monday, euro/dollar recovered 23.6% of the slide since April 23. My and my model remains short – but is close to turning. The candle chart suggests a bullish reversal here. Careful, as a break above 1.5520 would likely amplify the recovery.
Above 1.5515, resistance is at 1.5540. This followed by 1.5600. The euro/dollar has additional resistance at 1.5685.
Immediate support is now seen at 1.5460. Below 1.5410, euro/dollar has support at 1.5360 from a pivot low. Distant support is pegged at 1.5220.
Oscillators are mixed.
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Slightly bearish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen fell within an inside range on Monday after coining an over two-month high on Friday. My model is barely long and the semi dark cloud cover makes me uncomfortable. The risk is on the downside.
Initial support is at 104.50 from a 50-point pivot, which targets 104.00 and 105.00. Strong support is at 103.40 from a 50-point pivot, which targets 102.90 and 103.90.
Immediate resistance is at 105.60 from a 50-point pivot that targets 105.10 and 106.10. The next level is at 107.45. Above the 106.75 50-point pivot, which targets 106.25 and 107.25, distant resistance is at 107.95 from another 50-point pivot, which targets 107.45 and 108.45.
Oscillators are mixed.
NEAR-TERM: Mixed to slightly bearish
MEDIUM-TERM: Bullish
LONG-TERM: Bearish
Sterling/dollar
Sterling/dollar incurred choppy trading and closed virtually unchanged on Monday. The pair remained within recent ranges. My model is short, but the risk is on the upside.
Initial resistance still comes at 1.9760. Above 1.9885, there is a pivot high at 2.0046.
Immediate support is now seen at 1.9655. This is followed by 1.9624. Below 1.9597, distant support is 1.9495.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Mixed
LONG-TERM: Mixed
Dollar/Swiss franc
Dollar/Swiss slipped in an inside range. My model is long and the medium-term outlook remains bullish. However, the short-term outlook is bearish.
Immediate support is now seen at 1.0510. Below 1.0465 there is further support at 1.0375. Distant support is then pegged at 1.0255.
Initial resistance now comes at 1.0610. This is followed by 1.0795. Distant resistance now comes at 1.0855.
Oscillators are mixed.
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Bullish
LONG-TERM: Bearish