NEWS / Trade Policy

Daily Forex Market Commentary for August 18, 2006

GFT Daily Forex Market Commentary for August 18, 2006
By: Cornelius Luca, Currencies Analyst, GFT


The dollar managed to find its footing on Thursday with help from a strong Philly Fed report and this recovery was in line with expectations. It should attempt to pad its gains but it??™s not clear how much more it can add on a nice summer Friday.

Euro/dollar
The euro/dollar fell from a new uptrend high of 1.2886 and formed a possible bearish reversal formation. It will take a break below 1.2775 to confirm more weakness.

Below 1.2775, support is pegged at 1.2735. Below the strong area between 1.2690 and 1.2700 there is strong support at 1.2635.

Above 1.2865 the pair has resistance at 1.2886 and then at1.2912. Distant resistance remains at 1.2980.

Oscillators are mixed.

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

Dollar/yen
Dollar/yen fell further early on Thursday and recovered from a low of 115.18. It should try to advance further.

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

Initial support is at 115.50, from a 50-pip pivot, which targets 116.00 and 115.00. This level also marks the support from a short-term trendline. Distant support is at 114.20 from a 50-point pivot, which targets 113.70 and 114.70.

Oscillators are mixed.

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

Sterling/dollar
The sterling/dollar made an aggressive decline on Thursday and hit a two-week low and the selling pressure should continue as weak economic data keeps on piling up.

A break below 1.8810 would be negative for the pair. Further support comes at 1.8765 from a Fibonacci retracement level. Distant support is at 1.8675.

Initial resistance now comes at 1.8890. Strong resistance follows at 1.8960. Above 1.9000, good resistance follows at 1.9050.

Oscillators are bearish.

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

Dollar/Swiss franc
Dollar/Swiss reversed from a one week-low of 1.2236 and a bullish reversal pattern may be in place. A break above 1.2350 is needed to confirm this, but choppy trading is favored for a few days.

Above 1.2350, resistance is now pegged at 1.2390. Above it, the pair has resistance at 1.2440. Distant resistance is at 1.2526.

Below 1.2295, the pair has support 1.2255, 1.2240 and then at 1.2215. Next level is at 1.2190. There is a distant pivotal low in place at 1.2015.

Oscillators are mixed.

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

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