Forex Market Commentary for May 23, 2008 by Cornelius LucaGFT Daily Market Commentary
The dollar made a mild recovery versus the euro and the franc, a more impressive rally against the yen, but melted away versus the pound. Better-than-forecast UK retail sales forced more short covering. My model remains short dollars across the board, but the US currency should attempt another mild recovery before the long weekend. Only the existing homes sales report is due in the US today.
Euro/dollar
The euro/dollar slipped on profit taking on Thursday, but not enough to jeopardize the positive outlook. The interim inversed head-and-shoulders remains in place and my model remains long. Following some profit taking, the upmove should resume.
Immediate support is now seen at 1.5726. The next level remains at 1.5685. This is followed by 1.5460.
Initial resistance is now seen at 1.57957. Above 1.5865, euro/dollar has distant resistance at 1.6020.
Oscillators are mixed.
NEAR-TERM: Mixed t
MEDIUM-TERM: Mixed to slightly bullish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen rallied on Thursday to regain half of the losses made since May 14. My model is on the verge of turning long. Expect another attempt to advance today as well.
Immediate resistance is now at 104.50 from a 50-point pivot, which targets 104.00 and 105.00. Then, there are pivot highs at 105.43 and 105.69.
Initial support is at 103.80. Strong support follows at 103.40 from a 50-point pivot, which targets 102.90 and 103.90. The next big level is 102.30 from another 50-point pivot, which targets 101.80 and 102.80.
Oscillators are now advancing.
NEAR-TERM: Mixed to slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Bearish
Sterling/dollar
Sterling/dollar surged to a new three-week high on Thursday following some better than expected UK retail sales data, which suggests that the BoE is done cutting rates. My model remains long and the interim inversed head-and-shoulders pattern is in good shape.
Initial resistance now is still seen at 1.9850. Above it, there is further resistance at 1.9910. Distant resistance is at 2.0030.
Immediate support remains at 1.97605. This is followed by 1.9645. Only a break below 1.9545 would now jeopardize the cable’s recovery.
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Dollar/Swiss franc
Dollar/Swiss recovered on Thursday, but not enough to reverse my short model. The immediate outlook is bearish after forming a double top that targets 1.0130 and after the rising medium-term channel was pierced on a closing basis.
Immediate support is now seen at 1.0257. This is followed by 1.0200, 1.0130 and 1.0105. Distant support is now pegged at .9877.
Initial resistance now comes at 1.0352. If 1.0390 gives way, expect a test of the distant resistance at .1.0623.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Slightly bullish
LONG-TERM: Bearish