Forex Market Commentary for December 20, 2007 by Cornelius LucaGFT Daily Market Commentary
The dollar rallied versus the pound and the franc but only marked time versus the other major currencies. The pound sank to below the $2 mark on fears that the BoE will cut rates again to deal with the credit crunch problem. Expect sideways to lower bias for the US currency.
Euro/dollar
Euro/dollar closed virtually unchanged on Wednesday as well after recovering from a new low for the downtrend. There is a head-and-shoulders formation targeting 1.4085, but the pair must overcome the current consolidation.
Initial resistance is still seen at 1.4455. The next levels are 1.4490 and 1.4525. Above 1.4635, strong resistance is seen at 1.4750.
Immediate support remains at 1.4354. A break below this Fibonacci retracement level would suggest a test of 1.4290. Below 1.4250, euro/dollar has good support at 1.4165.
Oscillators are declining.
NEAR-TERM: Mixed
MEDIUM-TERM: Mixed
LONG-TERM: Bullish
Dollar/yen
Dollar/yen climbed remained in an inside range on Wednesday as well. More strength remains likely in the medium term, but a close above 114.30 is still needed to warrant medium-term strength. Keep in mind that there is a bullish flag that targets the 114.25 area and an inversed head-and-shoulders pattern that targets 115.10.
Immediate resistance is 113.60. Strong resistance follows at 114.20. The next level is 115.00.
Initial support now remains at 112.90 from a 50-point pivot that targets 113.40 and 112.40. The next level is at 111.60 from a 50-point pivot that targets 112.10 and 111.10.
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Mixed
LONG-TERM: Bearish
Sterling/dollar
Sterling/dollar sank to a three-month low following the dovish BoE’s MPC. The downside remains favored in the medium-term and there is a medium-term bearish flag that targets 1.9650.
Immediate support is now seen at 1.9930. This is followed by 1.9880. Next strong levels follow at 1.9830 and 1.9744.
Initial resistance is at 2.0030. The next ones are 2.0120 and 2.0230. Distant resistance follows at 2.0374.
Oscillators are declining.
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Bearish
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss exited from an inside range and struggled to a new high for the uptrend. Its uptrend still looks good but a close above the 1.1610 area is needed to signal further strength.
Initial resistance remains at 1.1610. Above it, resistance comes at 1.1710 and 1.1750.
Immediate support is now seen at 1.1480. The next level is 1.1450. Below 1.1395, support is pegged at 1.1350.
Oscillators are rising.
NEAR-TERM: Mixed with upside bias
MEDIUM-TERM: Bearish
LONG-TERM: Bearish