Forex Market Commentary for August 29, 2007 by Cornelius LucaGFT Daily Market Commentary
The yen crosses, both against the commodity and the European currencies, encountered further selling pressure on Tuesday, and dollar/yen got hit in the process. The weak US consumer confidence data undermined the dollar only briefly. While the most likely short-term outlook is to continue this pattern of weakness in the yen crosses, the market lacks much direction ahead of the long weekend, so don’t get married to your positions.
Euro/dollar
Euro/dollar edged lower on Tuesday as well. It remains overbought in the short term, so the initial bias is lower.
Below 1.3595, euro/dollar still has support comes at 1.3555. A break below the latter level would signal the resumption of the downmove, but this is unlikely. Next level is at 1.3480.
Initial resistance is at 1.3660 and then at 1.3690. This is followed by 1.3775. Above the weak trendline at 1.3820, resistance looms at 1.3853 from a pivotal high.
Oscillators are mixed.
NEAR-TERM: Mixed with downside bias
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Dollar/yen
Dollar/yen declined unexpectedly on Tuesday as well and this extricated it from an inside range. The selling pressure should continue but at a reduced pace.
Initial support is at 114.20 from another 50-point pivot that targets 113.70 and 114.70. Distant support is at 113.05.
Immediate resistance is now at 115.00 Strong resistance is at 115.50 from another 50-point pivot, which targets 115.00 and 116.00. Distant resistance is at 116.85 from a 50-point pivot that targets 116.35 and 117.35.
Oscillators are declining.
NEAR-TERM: Mixed with downside bias
MEDIUM-TERM: Bullish
LONG-TERM: Mixed
Sterling/dollar
Sterling/dollar slipped on Tuesday, as expected, but we need more information. The initial bias is down.
Immediate support is now at 1.9980. A break below the 1.9920 level would signal a further slide to 1.9780.
Initial resistance is at 2.0085. Next level is 2.0140. Above 2.0192, strong resistance follows at 2.0290. If the resistance at 2.0400 gives way, look for distant resistance at 2.0530.
Oscillators are declning.
NEAR-TERM: Mixed with downside bias
MEDIUM-TERM: Bearish
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss franc spiked down to an 18-day low on Tuesday before trimming losses. Expect some consolidation and then more weakness.
Immediate support is at 1.1962. Below 1.1870, support is seen at 1.1819. Next level is 1.1788.
Initial resistance is at 1.2050. This is followed by 1.2110 and 1.2140.
Oscillators are mixed.
NEAR-TERM: Mixed with downside bias
MEDIUM-TERM: Bullish
LONG-TERM: Bearish