Forex Market Commentary for September 20, 2007 by Cornelius LucaGFT Daily Market Commentary
The dollar consolidated against all major but the pound on Wednesday after the Fed cut its rate by 50 bps to 4.75 percent a day earlier. The pound was pressured by BoE minutes of the September 5-6 meeting, which showed MPC members agreeing that the upside risks to inflation had receded somewhat, suggesting a rate cut. Short yen crosses remain in favor.
Euro/dollar
The euro/dollar marked time on Wednesday after surging to a new all-time high the day before in the wake of the Fed move. Again, the overbought pair reached a significant Gann level and some pullback on profit taking is likely. However, sell only on a stop loss basis.
Above 1.4000, resistance comes at 1.4085. Distant resistance is seen at 1.4135. Further resistance is pegged at 1.4278.
Below 1.3927, euro/dollar now has support at 1.3870. This is followed by 1.3830. Only a break below 1.3745 would signal the start of a downmove.
Oscillators are rising.
NEAR-TERM: Mixed with downside bias
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen traded sideways on Wednesday but long euro/yen and carry trades remain favored. The close above 115.80 signals further strength.
Strong resistance is still seen at 117.10. Above 117.85 there is distant resistance at 118.80.
Strong support is at 115.50 from a 50-point pivot, which targets 115.00 and 116.00. Distant support follows at 114.20 from another 50-point pivot that targets 113.70 and 114.70.
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Mixed
LONG-TERM: Mixed
Sterling/dollar
Fearing that the BoE will imitate the Fed and cut rates forced the sterling/dollar to sink on Wednesday. Following a modest rally the pair edged lower.
Immediate support is now seen at 1.9930. A break below the pivot low at 1.9880 there is distant support at 1.9775.
Initial resistance is at 2.0050. Above 2.0150, strong resistance follows at 2.0220.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Mixed
LONG-TERM: Bullish
Dollar/Swiss franc
The oversold dollar/Swiss recovered from a new low for its downtrend. As expected for a few days, “following a brief bounce the sell-off should continue”. Another pattern like this should be seen here.
Immediate support is seen at 1.1797. Below it, support is seen at 1.1788 and then at 1.1740 from a pivotal low. Distant support is at 1.1715
Initial resistance is at 1.1845. Next level remains at 1.1924. Above it, resistance is at 1.1970. Distant resistance comes at 1.2025.
Oscillators are edging lower.
NEAR-TERM: Mixed
MEDIUM-TERM: Slightly bearish
LONG-TERM: Bearish