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Daily Forex Market Commentary for August 10, 2006

Daily Forex Market Commentary for August 10, 2006
By: Cornelius Luca, Currencies Analyst, GFT


The dollar gave back its gains made in the Far East. It should consolidate versus the European currencies and attempt to climb up versus the yen trough Thursday morning. This is when the market will act excited for a few minutes following the release of another huge US trade deficit. Some dollar weakness should follow for a short time. Choppy trading should continue.

Euro/dollar
The still overbought euro/dollar suffered more volatile trading after sinking in the Far East and then reversing losses as the bottom of its rising channel held. The medium-term outlook is cautiously positive.

Initial resistance is at 1.2908. Above 1.2935 there is resistance at 1.2984. Distant resistance remains at 1.3030.

Immediate support is at 1.2840 and that??™s followed by 1.2770 from the trendline protecting the uptrend. If this important level breaks, then look for a test of 1.2700. Next level is 1.2660. Distant support is at 1.2560.

Oscillators are mixed.

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

Dollar/yen
Dollar/yen gave back its gains after rallying in the Far East early Wednesday, but the upside is cautiously attractive. The key level today is 115.50, from a 50-pip pivot, which targets 116.00 and 115.00.

The trendline now comes at 116.10 and a break above this level would signal a test of the 116.85 50-point pivot, which targets 116.35 and 117.35.

The pair has initial support at 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: Mixed to slightly bearish
MEDIUM-TERM: Mixed to slightly bearish
LONG-TERM: Bearish

Sterling/dollar
The still overbought sterling/dollar recovered early losses but didn??™t do much else. The pair remains overbought in the short term and in the medium term, so the risk is on the downside. However, proof of a decline is needed.

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

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

Oscillators are rising.

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

Dollar/Swiss franc
Dollar/Swiss encountered highly volatile trading on Thursday but when the dust settled it closed little changed and remained in an inside range. The outlook is mixed.

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

Initial support is 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

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