NEWS / Macroeconomic Stories

Daily Forex Market Commentary for June 28, 2006

Wednesday, June 28, 2006 8:00 GMT
Daily Forex Market Commentary
By: Cornelius Luca, Currencies Analyst, GFT


The dollar consolidated quietly on Tuesday after the wild action of the past three days. The market ignored news about the US housing slowdown and the strong German Ifo report, as all eyes are on Thursday??™s rate hike.

Euro/dollar
Euro/dollar rallied sharply on Monday to wipe out Friday??™s losses. The pair remains in a downtrend, but the candles point to a bullish reversal. Euro/dollar must quickly stall and turn down if the negative outlook remains in place.

Strong resistance is pegged between 1.2600 and 1.2610. This area is important and if it??™s surpassed, then the downtrend is in grave danger Next strong resistance is at 1.2660, and a close above it would signal the formation of a double bottom. Above, there is the magic level at 1.2700.

Important support is at 1.2520. A close below it would signal a test of the support at 1.2455 from a decent Fibonacci retracement level.

Oscillators are falling.

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

Dollar/yen
Dollar/yen made a mild pullback on Monday after surging for two days before and got stuck in an inside range. The market will try to extricate it from it, not sure Tuesday will be the successful day.

Key resistance remains from a 50-point pivot at 116.85 from another 50-point pivot, which targets 116.35 and 117.35. The later target also houses the resistance declining since December.

Immediate support is at 116.00. Below 115.75, look for a possible floor at 115.50, which targets 116.00 and 115.00.

Oscillators are mixed.

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

Sterling/dollar
Sterling/dollar made a mild recovery on Monday after falling sharply on Friday as it failed to re-test the 50% mark of the April-May uptrend at 1.8137. The pair got stuck in an inside range. It must resume its decline quickly or risk trading sideways.

Initial resistance is still seen at 1.8280. A close above 1.8320 would signal that a forming bearish flag was wrong.

Initial support is at 1.8190. Below 1.8137 there is little strong support ahead of 1.7970 and 1.7930, but some interim support looms at 1.8060 and 1.8000.

Oscillators are declining.

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

Dollar/Swiss franc
Dollar/Swiss franc mirrored the euro and fell sharply on Monday after rallying on Friday. The recovery occurred after the pair failed to take out the 50 percent retracement at 1.2558. This level must give way on a closing basis if the rally can continue.

Below 1.2390, support is now seen at 1.2320. The next level is 1.2210 from a Fibonacci retracement level.

Immediate resistance is at 1.2480. Above 1.2558, resistance is at 1.2670. Strong resistance follows at 1.2708 from a Fibonacci retracement level.

Oscillators are rising.

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

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