Forex Market Commentary for October 23, 2007 by Cornelius LucaGFT Daily Market Commentary
The dollar made an aggressive and unexpected bullish reversal versus the European currencies despite the fact that the G7 finance ministers and central bankers expressed concern about the slow economic growth while keeping quiet about the weakness of the dollar. This suggests a dollar recovery. But it’s not that simple because the carry trades seem to be recovering again.
Euro/dollar
Euro/dollar collapsed from a new high for its lifetime of 1.4355 and this formed a bearish engulfing pattern. Following a brief recovery, the decline should resume.
Strong resistance is seen at 1.4225. Above 1.4275, strong resistance is seen at 1.4355.
Below 1.4120, euro/dollar now has support at 1.4085. Next level is 1.3975. Distant support is at 1.3855.
Oscillators are mixed.
NEAR-TERM: Mixed to slightly bearish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen sank recovered from the lowest level since September 10 and this aggressive upmove suggests a bullish reversal. This would make sense, given that the carry trades seem to be back on track.
Above 114.60 there is strong resistance at 115.50 from another 50-point pivot, which targets 115.00 and 116.00.
Initial support is at 113.26. Strong support is at 112.90 from a 50-point pivot that targets 113.40 and 112.40.
Oscillators are mixed.
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Slightly bullish
LONG-TERM: Mixed
Sterling/dollar
Sterling/dollar fell sharply (and unexpectedly) from a three-month high on Monday and formed a bearish reversal. Following a brief reprieve, the slide should continue.
Immediate support is seen at 2.0247. The next level is at 2.0205. This is followed by a Fibonacci retracement level at 2.0135. Distant support comes at 2.0025.
Initial resistance is at 2.0370. This is followed by 2.0440. Above 2.0550 there is another distant pivotal high at 2.0654.
Oscillators are declining.
NEAR-TERM: Mixed to slightly bearish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss surged from an over 2 ½-year low of 1.1602 that was reached early Monday and the upmove was aggressive enough to erase 61.8% of the slide between October 9 and 22. The immediate bias is now positive.
Initial resistance is at 1.1812 from a Fibonacci retracement level. Above this level, distant resistance is at 1.1894.
Immediate support is at 1.1732. This is followed by 1.1675. Below 1.1600, there is distant support at 1.1495.
Oscillators are mixed.
NEAR-TERM: Mixed to slightly bullish
MEDIUM-TERM: Mixed
LONG-TERM: Bearish