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Forex Market Commentary for May 14, 2008 by Cornelius LucaGFT Daily Market Commentary

The dollar rallied across the board on Tuesday following a stronger-than-expected US retail sales report and this adds some muscle to the US currency recovery. Among the European currencies, though, only cable looks truly weak. Thus, take your cues from the crosses and keep an eye on the US CPI report.

Euro/dollar

Euro/dollar fell on Tuesday but remained in an inside range. Nevertheless, my model went short again. Only a close below 1.5394 would encourage the bearish outlook.
Immediate support is now seen at 1.5432. Strong support then comes at 1.5394. Below 1.5365, distant support follows 1.5287.
Initial resistance is at 1.5505. Above 1.5600, euro/dollar retains additional resistance at 1.5685.
Oscillators are bearish.

NEAR-TERM: Mixed to slightly bearish
MEDIUM-TERM: Mixed to slightly bearish
LONG-TERM: Bullish

Dollar/yen

Dollar/yen rallied on Tuesday as well to erase all of the losses incurred both on Thursday and Friday. My model went long. Well, the upside still looks limited, but I’d sell dollars only on a stop.

Immediate resistance is at 105.08. Next strong is now seen at 105.60 from a 50-point pivot, which targets 105.10 and 106.10.
Initial support is now at 104.50 from a 50-point pivot, which targets 104.00 and 105.00. Distant support moved up to 103.40 from a 50-point pivot, which targets 102.90 and 103.90.

Oscillators are mixed.

NEAR-TERM: Mixed with upside bias
MEDIUM-TERM: Bullish
LONG-TERM: Bearish

Sterling/dollar

Sterling/dollar collapsed to a near three-month low as the combination of high UK inflation and economic weakness is toxic. My system remains short, and the short-term outlook is slightly bearish.

Immediate support is at 1.9420. Below 1.9363, support remains at 1.9273. Distant support looms at 1.9220 and 1.9185.
Initial resistance now comes at 1.9515. The next levels are 1.9580 and 1.9635. Above 1.9690, there is distant resistance at 1.9840.
Oscillators are bearish.

NEAR-TERM: Bearish
MEDIUM-TERM: Bearish
LONG-TERM: Mixed

Dollar/Swiss franc

Dollar/Swiss rallied on Tuesday and exited from in an inside range. My model went long, but I need more proof that this upmove is here to stay.

Initial resistance now comes at 1.0570. If this close level gives way, expect a test of 1.0622. Distant resistance is at 1.0745.
Immediate support is still seen at 1.0480. This is followed by 1.0445, 1.0410 and 1.0300. Distant support is then pegged at 1.0255.

Oscillators are rising.

NEAR-TERM: Mixed to slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Bearish