NEWS / Foreign Exchange

Daily Forex Market Commentary for May 23, 2006

Tuesday, May 23, 2006 8:00 GMT
Daily Forex Market Commentary
By: Cornelius Luca, Currencies Analyst, GFT


The dollar??™s recovery didn??™t last long and it quickly resumed its pattern of one day up and one day down on Monday. It reversed its very early gains and encountered some weakness. The dollar must find its footing right here or else is risking another bout of selling. The medium-term risk remains on the downside. Again, keep your focus on commodities for guidance.

Euro/dollar
Euro/dollar reversed very early losses on Monday and its aggressive recovery suggests further gains. Of course, the same situation occurred last week, so take your cues from commodities.

Above 1.2905, resistance is now seen at 1.2970. A break above this level signals a test of the further resistance at 1.3030.

Initial support is seen at 1.2820. Next level is at 1.2780. Only a close below 1.2695 would signal a further decline to 1.2625 and this would confirm a more sustained decline.

Oscillators are mixed.

NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bullish

Dollar/yen
Dollar/yen made the expected recovery only in the Far East on Monday but its rally was stopped by a Gann level at 112.90 and the pair fell quickly. More weakness should be in store today. Direction will still be dictated by the 111.60 50-point pivot, which targets 112.10 and 111.10.

The pair has immediate support at 110.80. Support follows at 110.35 from a 50-point pivot that targets 110.85 and 109.85.

Initial resistance is at 112.10. Above 112.60, resistance is pegged at 112.90 from a 50-point pivot, which targets 113.40 and 112.40. A close above 114.05 at any time would be very bullish on the dollar. Distant

Oscillators are mixed.

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

Sterling/dollar
Sterling/dollar fell further early on Monday on profit taking sales, as expected, before reversing losses.

Immediate resistance is at 1.8965. Above 1.9025, resistance is seen at 1.9120.

Initial support comes at 1.8790. Distant support now comes at 1.8630.

Oscillators are mixed.

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

Dollar/Swiss franc
Dollar/Swiss franc reversed its Friday??™s gains and is likely to attempt plowing further down today.

Immediate support is seen at 1.1990. The next level is pegged at 1.1915.

Above 1.2100, resistance is pegged at 1.2140. Strong resistance is now seen at 1.2240.

Oscillators are mixed.

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

DISCLAIMER: This forum and the information provided here should not be relied on as a substitute for extensive independent research before making your investment decisions. Global Forex Trading is merely providing this column for your general information. The views of the author are not necessarily those of Global Forex Trading, its owners, officers, agents or employees. In addition, any projections or views of the market provided by the author may not prove to be accurate. Global Forex Trading and Cornelius Luca will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this column. Global Forex Trading and Cornelius Luca do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.