Forex Market Commentary for August 24, 2007 by Cornelius LucaGFT Daily Market Commentary
Wednesday’s warning that the carry trades and the standard yen crosses will revive panned well on Thursday. Euro, cable the Aussie and the Kiwi advanced, while the yen weakened some more, and this pattern should attempt to continue today as well. But it’s a bit long in the tooth, and dollar/yen must break above 117.25 for the above expectations to turn into reality. The financial markets are still boiling with uncertainty and dislocation, and a one-way Friday should not be dismissed.
Euro/dollar
The euro/dollar rallied to a nine-day high and finally broke out of last Friday’s range. It’s getting overbought, according to some oscillators, and only a break above 1.3617 would signal more strength today
Above 1.3617, resistance remains at 1.3700. This is followed by 1.3775.
Immediate support comes at 1.3505. Below 1.3450, support remains at 1.3358. Distant support is at 1.3265.
Oscillators are mixed.
NEAR-TERM: Mixed with downside bias
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Dollar/yen
Dollar/yen broke above an inside range on its way to an eight-day high. It then trimmed its gains and only a break above 117.12 would encourage adding more to yen crosses. The pair barely remains under the trendline rising since January 2005, now at 116.00.
Strong resistance is at 116.85 from a 50-point pivot that targets 116.35 and 117.35. Distant resistance is at 118.25.
Initial support is at 115.50 from another 50-point pivot, which targets 115.00 and 116.00. Distant level is 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.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Sterling/dollar
Sterling/dollar surged out of an inside range on its way to a nine-day high. Its break above 1.9930 encouraged further demand but should now hold below 2.0140.
Initial resistance is at 2.0090. Above 2.0140, strong resistance follows at 2.0260.
If 2.0140 holds, then look for a slide to 1.9985. The next big level is 1.9920. Distant support is at 1.9800.
Oscillators are mixed, with risk on the downside.
NEAR-TERM: Mixed with downside bias
MEDIUM-TERM: Bearish
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss franc continued to mark time and closed virtually unchanged on Thursday as well, as a function of the EUR/CHF European carry trade. 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 mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bearish