NEWS / Macroeconomic Stories

Daily Forex Market Commentary for July 21, 2006

Friday, July 21, 2006 8:00 GMT
Daily Forex Market Commentary
By: Cornelius Luca, Currencies Analyst, GFT


The dollar struggled further down versus the European currencies and treaded water against the yen, as the market paused after the Fed Bernanke??™s dovish deposition a day earlier. The market showed little reaction to soft data on Thursday. Friday should see only choppy trading.

Euro/dollar
The euro/dollar edged higher on Thursday and erased nearly all of the losses made since Monday. There is good resistance at 1.2655 and only a break higher would signal more strength.

If 1.2655 gives way, then expect a test of the further level at 1.2700 and a break higher means that the pair already has a significant low in place. Distant resistance is at 1.2862.

Support now comes at 1.2600 and that??™s followed by 1.2560. Next level lies at 1.2510. Distant support is pegged to 1.2458.

Oscillators are rising.

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

Dollar/yen
Dollar/yen did pretty much nothing on Thursday after peaking at a three-month high of 117.86 early on Wednesday.

Initial support remains at 116.65. Below 116.35, the pair has support at 115.70. Strong support remains at 115.50, from a 50-pip pivot, which targets 116.00 and 115.00.

Above 117.35, strong resistance remains at 118.25 from another 50-point pivot that targets 117.75 and 118.75.

Oscillators are mixed.

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

Sterling/dollar
Sterling/dollar rose to a 10-day high on Thursday, but the momentum doesn??™t favors the upside that much anymore.

Resistance now comes from the area between 1.8540 and 1.8560. Distant resistance looms at 1.8665.

Initial support is at 1.8450 and then at 1.8415. That??™s followed by 1.8365. Below 1.8320, the pound has support at 1.8260. Distant support comes from a pivotal at 1.8088.

Oscillators are rising.

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

Dollar/Swiss franc
Dollar/Swiss franc edged lower on Thursday, as expected, but Friday will probably see only choppy trading.

Support is now seen at 1.2385, and this is very important. A close below this level would signal a further decline to 1.2340 and 1.2290.

Initial resistance is between 1.2500 and 1.2520. Above this area, further resistance is seen at 1.2580. A break above this level would suggest a further rally to 1.2640.

Oscillators are falling.

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

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