Forex Market Commentary for May 8, 2008 by Cornelius LucaGFT Daily Market Commentary
The dollar rallied on Wednesday versus the European currencies, as expected, particularly against the pound, but gave back its early gains versus the yen. The US currency should consolidate today, unless the German industrial production is weak and/or the BoE surprises with a rate cut; then it will fly.
Euro/dollar
Euro/dollar slumped on Wednesday to test its recent lows and my model remains short. The selling pressure should continue today as well
Immediate support is now seen at 1.5230. Below 1.5200, euro/dollar would test support at 1.5115. Distant support is pegged at 1.5040.
Above 1.5365, resistance is now seen at 1.5420. The euro/dollar then has additional resistance at 1.5515,1.5600 and 1.5685.
Oscillators are bearish.
NEAR-TERM: Bearish
MEDIUM-TERM: Bearish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen failed to break above the 105.60 pivot and went south and slightly below 105.00. My model is still long and the immediate risk is on the upside.
Immediate resistance remains at 105.20. Strong resistance follows 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.
Initial and very important support is at 104.50 from a 50-point pivot, which targets 104.00 and 105.00. Strong support follows at 103.40 from a 50-point pivot, which targets 102.90 and 103.90.
Oscillators are rising.
NEAR-TERM: Mixed to slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Bearish
Sterling/dollar
Sterling/dollar collapsed to a 2 ½-month low after weak UK data enhanced expectations for a rate cut. The BoE is meeting today, but the market doesn’t expect a cut. My model is short, but the risk is on the upside if the central bank remains neutral.
Below 1.9495, support is now seen at 1.9410. This is followed by 1.9363. Distant support looms at 1.9185.
Initial resistance still comes at 1.9585. Above 1.9690, there is distant resistance at 1.9840.
Oscillators are declining.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Dollar/Swiss franc
Dollar/Swiss rallied to a new high for the upmove. My model is long and the medium-term outlook remains bullish. The short-term outlook is bullish.
Initial resistance now comes at 1.0627. This is followed by 1.0690. Distant resistance now comes at 1.0795.
Immediate support is now seen at 1.0550. This is followed by 1.0510. Below 1.0430, the pair has further support at 1.0375. Distant support is then pegged at 1.0255.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bearish