Forex Market Commentary for October 2, 2007 by Cornelius LucaGFT Daily Market Commentary
The European currencies fell from slightly new highs for their uptrend on profit taking after surging a day earlier. Dollar/yen on Monday managed to reverse all of its losses from Friday and, with the commodity currencies still surging, the carry trades and the standard yen crosses continue to look attractive.
Euro/dollar
The euro/dollar slipped from a marginally new high of 1.4286 but the overbought pair didn’t fall enough to form a bearish reversal formation. Again, hold long positions and sell only on a stop-loss order basis.
Initial resistance is at 1.4281. Above 1.4305, strong resistance is seen only at 1.4400. Distant resistance is at 1.4580.
Below 1.4200, euro/dollar now has support at 1.4140.
Oscillators are rising.
NEAR-TERM: Mixed with upside bias
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen rallied to an 11-day high on Monday to erase losses made a day before but remained in an inside range. Long euro/yen and carry trades remain favored. Expect sideways trading today. The risk is on the upside after breaking the resistance of a declining trendline.
The immediate resistance level is 116.00. The next big level is 116.85 from another 50-point pivot that target: 116.35 and 117.35.
Strong support is at 115.50 from another 50-point pivot, which targets 115.00 and 116.00.
Distant support is at 114.20 from another 50-point pivot that targets 113.70 and 114.70.
Oscillators are mixed.
NEAR-TERM: Mixed
MEDIUM-TERM: Mixed
LONG-TERM: Mixed
Sterling/dollar
Sterling/dollar slipped from a new over two-month high on Monday. Following a brief decline, the rally should continue.
Immediate support is seen at 2.0405. A break below the 2.0365 level would signal a retest of 2.0315.
Above 2.0493, strong resistance comes at 2.0530. If this level gives way, look for a test of the pivotal high at 2.0654. Distant resistance is now perched at 2.0735.
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss recovered from a new 2 ½-year low of 1.1619 and the move was significant enough to produce an incipient bullish reversal. The pair is heavily oversold, of course, but buy only a stop loss basis.
Initial resistance is at 1.1720. The next level is 1.1770 and this is followed by 1.1850.
Initial support is at 1.1620. Below 1.1585, there is support at 1.1495. Distant support is at 1.1410.
Oscillators are declining.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Bearish