NEWS / Monetary Policy

Daily Forex Market Commentary for September 18, 2006

GFT Daily Forex Market Commentary by Cornelius Luca
Daily Forex Market Commentary for September 18, 2006


The dollar closed higher on Friday and this strength should last as well. Given that the G7 meeting had no choice but to drop the reference to stronger yen and yuan, which had intended to pursue, and called instead for greater exchange rate flexibility, the dollar rose early on Monday. The lack of direction will persist this week as well, so perhaps the crosses should prove more profitable, but the bias is bullish for the dollar.

Euro/dollar
Euro/dollar sank to a seven-week low of 1.2630 on Friday and the sentiment remains negative.

Below 1.2630 support looms at 1.2555.

Immediate resistance is now pegged at 1.2690. Above 1.2750 there is resistance at 1.2830.

Oscillators are mixed.

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

Dollar/yen
Dollar/yen has an upward bias early this week, after the silly G7 meeting showed once again how powerless the G7 meeting is, as it allowed Japan and China to get away without even a toothless call to strengthen their currencies.

Good resistance remains at 118.25 from a 50-point pivot that targets 117.75 and 118.75. Distant resistance is still seen in the 119.10 area.

The pair has initial support at 117.30. Strong support follows at 116.85 from another 50-point pivot, which targets 116.35 and 117.35.

Oscillators are rising.

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

Sterling/dollar
Sterling/dollar fell on Friday, but managed to close the week higher. Following a brief bounce, the market should attempt pressing the cable further down again.

Immediate support is at 1.8750. That??™s followed by 1.8700. There is a floor at 1.8650 from the 50% retracement of the July to August upmove and from a trendline rising since early April.

Initial resistance is seen at 1.8820. Above 1.8870 there is resistance at 1.8905.

Oscillators are falling.

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

Dollar/Swiss franc
Dollar/Swiss hit a 4 ??-month high of 1.2621 on Friday. There is more room on the upside, but some profit taking is first due.

Above 1.2621, dollar/Swiss franc has resistance at 1.2695. There is a Fibonacci retracement level at 1.2732.

Below 1.2510, there is support at 1.2430. Next floor is pegged at 1.2375.

Oscillators are rising.

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

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