Daily Forex Market Commentary for August 16, 2006

GFT Daily Forex Market Commentary for August 16, 2006
by: Cornelius Luca, Currencies Analyst, GFT

The dollar slumped sharply on Tuesday, slightly more than expected, as a soft PPI report highlighted the obvious end of the Fed rate tightening. Whether it tightens one more time this year or not, the world will survive ??� but meanwhile, one month??�s report doesn??�t make a trend. Keep your eyen on the CPI and on the housing data today ??� they can be market movers. This weakness should not last long and the dollar should attempt to climb up again.

Euro/dollar
The euro/dollar rallied from a new low of the downmove at 1.2694 and closed higher to erase about 38.2% the Fibonacci retracement level Thursday and Tuesday. The medium-term outlook remains only very cautiously positive.

Above 1.2800 the pair has resistance at 1.2830. Next area to watch is around 1.2870. Distant resistance looms at 1.2912.

Immediate support is still seen nearby at 1.2735. Below the strong area between 1.2690 and 1.2700 there is strong support at 1.2635.

Oscillators are mixed.

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

Dollar/yen
Dollar/yen fell slightly more aggressively than I expected and formed a bearish reversal formation, giving back as much as half of its recent upmove. Continue playing the Gann pivots, there is not so much direction right now, even though the immediate risk is down.

Initial support is at 115.90. Below 115.72, the pair still has strong support at 115.50, from a 50-pip pivot, which targets 116.00 and 115.00. Distant support is at 114.20 from a 50-point pivot, which targets 113.70 and 114.70.

Above 116.35, good resistance is seen at 116.85 from another 50-point pivot, which targets 116.35 and 117.35.

Oscillators are mixed.

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

Sterling/dollar
The sterling/dollar rallied on Tuesday, but for a change the upmove was not impressive and failed to wipe out even a third of its recent losses. It should give it another chance today but I??�m not sure it can get too far up from here.

Initial resistance comes at 1.8960. The next level is 1.8990. Above 1.9050, good resistance follows at 1.9127.

Immediate support comes at 1.8890 and that??�s followed by 1.8840. Next level is at 1.8765 from a Fibonacci retracement level.

Oscillators are mixed.

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

Dollar/Swiss franc
Dollar/Swiss made an advance only in very early trading on Tuesday when it reached a new high for the upmove at 1.2443 before turning south in an aggressive manner. The 60-day moving average provided a floor so far, so take your cues from this line in the 1.2345 area.

If this area breaks, then look for a test of 1.2320. Below 1.2285, the pair now has support at 1.2225.

Immediate resistance is pegged at 1.2405. Above 1.2440, the pair has resistance at 1.2480. That??�s followed by 1.2526.

Oscillators are mixed.

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