Forex Market Commentary for October 8, 2008 by Cornelius LucaGFT Daily Market Commentary
The dollar failed to make much of a bearish reversal after surging a day earlier against the European and the commodity currencies, and closed little changed overall. All eyes remain on the battering of financial stocks, even though on Tuesday selling short was still off limits. The market is pricing in a UK rate cut on Thursday, but Federal Reserve Chairman Bernanke signaled readiness to lower interest rates soon, along with other measures (such as the Commercial Paper Facility Fund, designed to buy commercial paper) in order to alleviate the economic decline and thaw the credit freeze. Sideways trading should persist today, but the upside is favored for the dollar.
Euro/dollar
One day after branding a 14-month low, the euro/dollar made an early bullish reversal. But it failed to hold on to gains and closed well off its highs. My model remains short and the euro/dollar remains weak near the channel support. It remains oversold, but with the upside limited, its pressure should continue.
Immediate support is at 1.3480. The next level is 1.3443. Below 1.3350 there is support at 1.3260. Distant support looms at 1.3145.
Resistance remains at 1.3615. Above 1.3705, the euro/dollar has resistance at 1.3857. Distant resistance follows at 1.3980.
Oscillators are declining.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Bearish
Dollar/yen
Dollar/yen failed to hold on to early gains and closed mixed on Tuesday. It remains below the neckline of an irregular head-and-shoulders pattern. Mixed, choppy trading is likely today. The immediate level to watch is 101.25 from a 50-point pivot, which targets 100.75 and 101.75.
Initial support is still seen at 101.75. The next level to watch low is the 50-point pivot at 100.25, which targets 99.75 and 100.75. Distant support is at 99.25 from another 50-point pivot, which targets 98.75 and 99.75.
Immediate resistance is at 101.75. This is followed by 102.30 from a 50-point pivot, which targets 101.80 and 102.80. Above 103.40 from another 50-point pivot, which targets 102.90 and 103.90, distant resistance looms at 104.50 by a 50-point pivot, which targets 104.00 and 105.00.
Oscillators are sliding.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Sterling/dollar
Weak industrial data sent the pound to a new 2 ½-year low on Tuesday before recovering losses. Following an early bounce, the sell-off should resume, as the BoE is expected to cut rates on Thursday.
Immediate support is 1.7445. The next level is 1.7337. Below 1.7250, the next big level is 1.7110.
Initial resistance is at 1.7545. The next level is 1.7650. Above 1.7838, distant resistance is at 1.8000.
Oscillators are bearish.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Bearish
Dollar/Swiss franc
Dollar/Swiss franc nearly made a bearish reversal on Tuesday, but that wasn’t confirmed. Again, following a mild pull back, the upside should be retested.
Initial resistance is at 1.1500. Above 1.1590, distant resistance comes at 1.1875.
Immediate support is at 1.1395. Below it, support is seen at 1.1308. Good support follows at 1.1220.
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bullish