NEWS / European Community

Daily Forex Market Commentary for August 9, 2006

Daily Forex Market Commentary for August 9, 2006
by: Cornelius Luca, Currencies Analyst, GFT


The market followed the plan, freaking out and selling some dollars once the Fed matched the market expectations and paused (or stopped for good) from hiking rates on Tuesday. The oversold dollar then rallied aggressively and this may the temporary end of the dollar weakness.

Euro/dollar
The overbought euro/dollar fell sharply after volatile trading following the Fed lack of action. It broke out of Friday??™s range and is testing the bottom of its rising channel. The pair is now no longer overbought in the short term but the medium-term outlook is cautiously positive.

Immediate support is at 1.2750 from the trendline protecting the uptrend. If this important level gives way, look for a test of 1.2700. Next level is 1.2660. Distant support is at 1.2560.

Initial resistance is at 1.2805. Above 1.2850 there is resistance at 1.2908. Next level to watch is at 1.2984. Distant resistance is at 1.3030.

Oscillators are mixed.

NEAR-TERM: Slightly bearish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish

Dollar/yen
Dollar/yen surged in very early Wednesday trading and broke out of Friday??™s range as it rallied to the highest level since July 28. The medium-term outlook is now mixed but it??™s too early that the downside is over.

The trendline comes at 116.05. A break above this level would signal a test of the 116. 50-point pivot, which targets 116.35 and 117.35.

The pair has initial support at 115.50, from a 50-pip pivot, which targets 116.00 and 115.00. Below 114.50, strong support is at 114.20 from a 50-point pivot, which targets 113.70 and 114.70.

Oscillators are mixed.

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

Sterling/dollar
The extraordinarily overbought sterling/dollar fell from a 3 ??-month high of 1.9144 and gave back about 61.8% from Friday??™s gains. The pair remains overbought in the short term and in the medium term, but be careful shorting it.

Immediate support is now seen at 1.8950. Next level is at 1.8890. Distant support is at 1.8850.

Above 1.9030, cable has resistance at 1.9100. That??™s followed by 1.9144 and by 1.9235 from the target a Gann level.

Oscillators are rising.

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

Dollar/Swiss franc
Dollar/Swiss recovered most of Friday??™s losses but remains in an inside range. The medium-term outlook is now cautiously mixed.

Above 1.2335, there is resistance at 1.2385. That??™s followed by 1.2425. Distant resistance is at 1.2526.

Initial support is at 1.2285 and then at 1.2245. Below 1.2190, the pair has support pegged at 1.2090, which is also the target of a double top formation.

Oscillators are mixed.

NEAR-TERM: Mixed
MEDIUM-TERM: Mixed slightly bearish
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.