NEWS / Foreign Exchange

Daily Forex Market Commentary for May 24, 2006

Wednesday, May 24, 2006 8:00 GMT
Daily Forex Market Commentary
By: Cornelius Luca, Currencies Analyst, GFT


The dollar was pretty undecided for most of the day on Tuesday, neither extending its Monday??™s losses, not extending its one-day up and one-day down pattern at work against the European currencies since May 12. It then exploded higher in late trade for motives unclear at this time. The bias is bullish for the US currency, but only in the very short term. Those commodities keep on climbing??¦

Euro/dollar
Euro/dollar marked time on Tuesday in an inside range but then slumped in late trading The pair is basically in a consolidation pattern, so, while the bias is on the downside, look for the direction of the breakout.

Initial support is still seen at 1.2750. A close below 1.2695 would signal a further decline to 1.2625 and this would confirm a more sustained decline.

Above 1.2830, resistance is now seen at 1.2870. Only a break above 1.2970 signals the end of the decline a test of the further resistance at 1.3030.

Oscillators are mixed.

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

Dollar/yen
Dollar/yen struggled lower on Tuesday and then rallied sharply in very late trading. Again, direction will still be dictated by the 111.60 50-point pivot, which targets 112.10 and 111.10.

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.

The pair has immediate support at 111.70. Next big level is 115.50, a 50-point pivot that targets 115.00 and 116.00. Then, there is 110.80. Support follows at 110.35 from a 50-point pivot that targets 110.85 and 109.85.

Oscillators are mixed.

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

Sterling/dollar
Sterling/dollar treaded water for most of the day on Tuesday and then sank in late trading.

Initial support comes at 1.8745. Distant support now comes at 1.8630.

Immediate resistance is at 1.8850. Above 1.8905 there is resistance at 1.8965. Distant resistance is seen at 1.9025.

Oscillators are mixed.

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

Dollar/Swiss franc
Dollar/Swiss franc rallied in very late trading on Tuesday and should attempt to recover further today ??“ only that direction never lasted past one day lately.

Above 1.2120, resistance is pegged at 1.2155. Strong resistance is now seen at 1.2240.

Immediate support is seen at 1.2060. That??™s followed by the area between 1.2015 and 1.1990. The next level is pegged at 1.1915.

Oscillators are mixed.

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

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