NEWS / Fiscal Policy, Budget

Daily Forex Market Commentary for July 3, 2006

Monday, July 03, 2006 8:00 GMT
Daily Forex Market Commentary
By: Cornelius Luca, Currencies Analyst, GFT


The dollar marched further down on Friday after collapsing late on Thursday. The slide is probably overdone, but trading should be very quiet before and during the Independence Day holiday.

Euro/dollar
Euro/dollar rallied further on Friday, smashing the long standing resistance at 1.2700 and forming a bullish reversal on the weekly charts. The pair has already wiped out 61.8% of the losses made in the previous three weeks and more room is seen on the upside. However, it should be slow today.

Above this Fibonacci retracement level at 1.2785, resistance now comes at 1.2850 and 1.2919.

Initial support is at 1.2725. Next support lies at 1.2670 from a Fibonacci retracement level.

Oscillators are rising.

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

Dollar/yen
Dollar/yen sank further on Friday but should now stop for at least a couple of days.

Immediate support is at 114.20 from a 50-point pivot that targets 113.70 and 114.70.

Above 114.70, strong resistance now comes at 115.50, from a 50-pip pivot, which targets 116.00 and 115.00. Next level is 116.58.

Oscillators are declining.

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

Sterling/dollar
Sterling/dollar marched further up on Friday pushing against a short term trendline resistance, but should now stall for a couple of days.

Above 1.8500, resistance comes at 1.8565 from the 50% mark of the downtrend between May and June. Strong resistance follows at 1.8630.

Below 1.8360 there is support at 1.8320. Strong support then lies at 1.8210.

Oscillators are rising.

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

Dollar/Swiss franc
Dollar/Swiss franc sank further on Friday and smashed the strong support at 1.2350. It should now pause for a couple of days

The uptrend remains in place for only as long as the nearby area between 1.2240 and 1.2250 remains intact, but the short-term outlook is negative.

If this area gives way support is then pegged at 1.2150 from a short-term Fibonacci retracement level. Next good level comes at 1.2075.

Above 1.2295, resistance is now seen at 1.2375.

Oscillators are declining.

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

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