Forex Market Commentary for August 22 by Cornelius LucaGFT Daily Market Commentary
The FX markets enjoyed the second day of uneasy calm on Tuesday, even though an unnamed UK bank had to use funds at a penalty rate from the Bank of England. Most financial markets are now starting to digest the calamity of the subprime debacle and more hiccups are to be expected. Once again, probably the better strategy to follow take is selling of the yen crosses.
Euro/dollar
The euro/dollar remained glued to a secondary Fibonacci retracement level at 1.3475 on Monday and was still stuck in an inside range. Sideways to lower trading is expected.
Below 1.3410, support remains at 1.3358. Distant support is at 1.3265.
Initial resistance is still in place at 1.3550. Above 1.3625 there is resistance at 1.3700. This is followed by 1.3775.
Oscillators are declining.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Bullish
Dollar/yen
As expected, dollar/yen’s recovery on Monday didn’t last long, as the pair fell on the day. Following an early mild recovery the sell-off should resume as the pair remains under the trendline rising since January 2005, now at 116.00.
Initial support is at 114.20 from another 50-point pivot that targets 113.70 and 114.70. Below 113.25, support is at 112.90 from a 50-point pivot that targets 113.40 and 112.40.
Above 114.90, strong resistance is at 115.50 from another 50-point pivot, which targets 115.00 and 116.00.
Oscillators are declining.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Sterling/dollar
Sterling/dollar slipped on Tuesday but remained stuck within Friday’s wide range. The pair should consolidate further today.
Immediate support is at .9750. A break below the pivotal level at 1.9653 would signal a further slide to 1.9550.
Strong resistance is at 1.9900. Strong resistance follows at 1.9937. It is very unlikely that the resistance at 2.0015 will gives way.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss franc marked more time and closed virtually unchanged on Tuesday. Expect further consolidation.
Initial resistance is still seen at 1.2100. The next level is .2140. Above 1.2219, distant resistance is at 1.2310.
Immediate support is at 1.2017. The next level looms at 1.1970. Below 1.1870, distant support is seen at 1.1819.
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bearish