NEWS / Macroeconomic Stories

Daily Forex Market Commentary for August 28, 2006

GFT Daily Forex Market Commentary for August 28, 2006
by: Cornelius Luca, Currencies Analyst, GFT


The dollar surged versus the yen on Friday on fears that the BoJ won??™t hike rates this year, but closed flat against the European currencies. With London closed today, prepare for a another choppy session.

Euro/dollar
Euro/dollar made a choppy decline on Friday, as expected, but managed to close flat.

Initial resistance is still seen at 1.2800 and then at 1.2835. That??™s followed by 1.2900. Above 1.2938, the pair has resistance from a pivotal high at 1.2979.

Immediate support is at 1.2715. Below this level, strong support remains between 1.2690 and 1.2700. Distant support is at 1.2655.

Oscillators are mixed.

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

Dollar/yen
Dollar/yen surged to a one-month high on Friday on concern that the weak Japanese CPI report means the BoJ will not tighten borrowing costs again in 2006. The pair was stopped for now by a trendline declining since December 5. The market should be sideways to lower today

Above 117.39, good resistance is still seen at 118.25 from a 50-point pivot that targets 117.75 and 118.75.

The pair has strong support at 116.85 from another 50-point pivot, which targets 116.35 and 117.35. Below 115.80, good support remains at 115.50, from a 50-pip pivot, which targets 116.00 and 115.00.

Oscillators are mixed.

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

Sterling/dollar
The sterling/dollar traded sideways and closed little changed on Friday. Further sideways trading is favored while the pair remains stuck in an inside range and London is closed.

Support is initially seen at 1.8825. That??™s followed at 1.8765 by a Fibonacci retracement level. Next levels remain at 1.8685, 1.8655 and 1.8615.

Initial resistance comes at 1.8920. That??™s followed by 1.9024.

Oscillators are mixed.

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

Dollar/Swiss franc
Dollar/Swiss franc reversed rallied to a 10-day high of 1.2422 on Friday before slipping on profit taking. Only a close above the nearby 1.2420 level would increase the odds of a more sustained upmove.

Above 1.2420, dollar/Swiss franc has resistance at 1.2480 and then very strong resistance at 1.2510. If 1.2510 crumbles, which would be tough, then look for a test of 1.2580.

Below the strong support at 1.2340, next floor is pegged at 1.2285. 1.2255 is strong as well.

Oscillators are mixed.

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

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