Forex Market Commentary for September 9, 2008 by Cornelius LucaGFT Daily Market Commentary
The nasty dollar sell-off in the Far East on Monday turned out to be only a knee-jerk reaction to news the Treasury stepped in and took over the Fannie Mae and Freddie Mac to protect international and domestic investors. With the stock markets reacting positively to the government rescue (at least in the short term) and the oil prices falling despite the inclement weather down south, the US currency made an aggressive recovery. I don’t know if this move has more legs to go today, even though the medium-term outlook remains positive for the dollar.
Euro/dollar
Euro/dollar reversed early gains to plunge to a new 11-month low on Monday, and he aggressive decline turned my model short again. The immediate outlook is marginally positive, while the medium-term outlook is negative.
Initial resistance is at 1.4157. The next cap is between 1.4197 and 1.4207. If this strong area gives way, the pair is in for an aggressive recovery toward 1.4295. Distant resistance is at 1.4390.
Immediate support is at 1.4056. Below 1.3835, distant support is at 1.3695.
Oscillators are declining.
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Dollar/yen
Dollar/yen was the calmest of the majors on Monday, with the yen crosses doing the talking. It rallied on the day, but closed well off its highs. The short-term outlook is mixed, but my model is back to being short.
Initial support is at 107.45. Strong support follows at 106.75 from a 50-point pivot, which targets 106.25 and 107.25.
Immediate resistance is at 107.95 from a 50-point pivot, which targets 107.45 and 108.45. Above 108.70, resistance remains at 109.15 from another 50-point pivot, which targets 109.65 and 108.65. Distant resistance is at 110.35 from a 50-point pivot, which targets 109.85 and 110.85.
Oscillators are declining.
NEAR-TERM: Bearish
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Sterling/dollar
Sterling/dollar unceremoniously reversed early gains to sink aggressively at a new low for the downtrend. My model promptly went short. The medium term is bearish, but the short-term outlook is mixed.
Initial resistance is at 1.7630. This is followed by 1.7737. Above the strong pivot at 1.7975, distant resistance remains at 1.8100.
Immediate support is at 1.7471. Distant support looms at 1.7315.
Oscillators are falling.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Bearish
Dollar/Swiss franc
Dollar/Swiss surged to the highest levels since the end of last year and my model remains long. Following some corrective decline, the uptrend should resume.
Immediate support is at 1.1270. This is followed by 1.1193. Distant support is at 1.1100.
Initial resistance comes at 1.1371. Above 1.1466, a pivot high remains at 1.1605.
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Mixed