Forex Market Commentary for August 6, 2008 by Cornelius LucaGFT Daily Market Commentary
The dollar made sharp gains on Tuesday, as the market is more convinced a significant low is finally in place. The commodity currencies are melting away amid aggressive long liquidation and fears that a commodity fund could be in trouble. Under these circumstances, mixed US data, nasty talk from the bankrupt Iran and a tropical storm in the Gulf pass unnoticed. The Fed left rates unchanged, of course, but shifted fears toward recession. The dollar should march higher, but at a reduced pace.
Euro/dollar
The euro/dollar collapsed on Tuesday and soft regional data didn’t help. Following some early recovery, the decline should resume.
Initial support now comes from a new pivot low at 1.5449. Further support follows at 1.5420. Distant support is at 1.5305.
Immediate resistance is at 1.5517. This is followed by 1.5580 and 1.5630. Above 1.5700, distant resistance is 1.5770 from a Fibonacci retracement level.
Oscillators are declining.
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Bearish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen struggled to a new high for the uptrend but made little progress. The upside is only cautiously favored today as well.
Immediate resistance is at 108.45. The next resistance is at 109.15 from a 50-point pivot, which targets 109.65 and 108.65.
Support remains at 107.95 from a 50-point pivot, which targets 107.45 and 108.45. Distant support follows at 106.75 from a 50-point pivot, which targets 106.25 and 107.25.
Oscillators are rising.
NEAR-TERM: Mixed to slightly bullish
MEDIUM-TERM: Mixed to slightly bullish
LONG-TERM: Mixed
Sterling/dollar
Another weak UK report helped sterling/dollar collapse for a third consecutive day on Tuesday. Following an early bounce, the pound should see more weakness.
Immediate support is now seen at 1.9522. This is followed by 1.9485. Distant support is still seen at 1.9410.
Initial resistance now comes at 1.9608. The next level is 1.9670. Above 1.9760, the next significant level is at 1.9855.
Oscillators are falling.
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Slightly bearish
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss rallied to a 2 ½-month high on Tuesday. Following some pullback, the upmove should resume.
Above 1.0560, resistance remains at 1.0622. This is followed by 1.0790.
Initial support is seen at 1.0515. This is followed by 1.0480, 1.0435 and 1.0405. Below 1.0370, distant support now comes at 1.0315.
Oscillators are rising.
NEAR-TERM: Mixed to slightly bullish
MEDIUM-TERM: Slightly bullish
LONG-TERM: Mixed