Forex Market Commentary for November 28, 2007 by Cornelius LucaGFT Daily Market Commentary
The dollar suffered through another mixed day of trading that was dominated by a return to carry trades. Given the very patchy performance of the past few days, don’t be too convinced about this and don’t stay married to positions. The US currency looks primed to boost gains against the low-yielding yen and franc, but nearly every day looks different.
Euro/dollar
The overbought euro/dollar made an apparent bearish reversal pattern on Tuesday but remained in an inside range. Expect choppy trading until it breaks higher.
Initial support remains at 1.4800. Below 1.4777, the next floor is at 1.4700. This is followed by 1.4635 and 1.4560.
Immediate resistance is at 1.4910. Above 1.4940, strong resistance is seen at 1.4966. This is followed by 1.5000. Distant resistance is now pegged at 1.5130.
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/yen
The oversold dollar/yen made an aggressive rally on Tuesday after nailing a 2 ½-low on Monday and formed a bullish reversal. Now, this will last only the love for carry trades continues, and we had fake reversals before. A pullback is likely first for this pair.
Good support comes at 107.95 from another 50-point pivot; targets 107.45 and 108.45.
Immediate resistance is at 109.15 from another 50-point pivot that targets 109.65 and 108.65. Strong resistance follows at 111.00.
Oscillators are declining.
NEAR-TERM: Mixed with upside bias
MEDIUM-TERM: Bearish
LONG-TERM: Bearish
Sterling/dollar
Unlike the other high yielders, sterling/dollar slipped on Tuesday but stayed within an inside range. Thus, mixed to higher trading is likely.
Above 2.0755, resistance remains at 2.0795. Above it there is resistance at 2.0840. Distant resistance looms at 2.0980.
Immediate support remains at 2.0660. This is followed by 2.0590. Below 2.0520, the next floors are at 2.0455 and eventually at 2.0315.
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Mixed
LONG-TERM: Bullish
Dollar/Swiss franc
Just like dollar/yen, the oversold dollar/Swiss formed a bullish reversal on Tuesday but got stuck in an inside range and this newly-found strength needs confirmation. It is very oversold, but buy it back only on a confirmation.
Initial resistance is at 1.1096. This is followed by 1.1175 and 1.1285.
Immediate support is at 1.1010. Below 1.0960, support remains pegged at the pivotal low of 1.0892. Distant support follows at 1.0805.
Oscillators are declining.
NEAR-TERM: Mixed with upside bias
MEDIUM-TERM: Bearish
LONG-TERM: Bearish