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Daily Forex Market Commentary for October 11, 2006

Forex Market Commentary for October 11, 2006
GFT Daily Forex Market Commentary by Cornelius Luca


The dollar rallied sharply on Tuesday, once traders dragged themselves back to work. It wasn??™t the North Korean adventure behind it, but fear that Elliott??™s wave 5 will travel without enough traders on board. The US currency should see more strength overall, but it??™s running into resistance and the next short-term move should be down.

Euro/dollar
Euro/dollar fell to a 2 1/2-month low on Tuesday and nicked a medium-term Fibonacci retracement level at 1.2523. Only a close below this level would signal medium-term weakness without a pause. A pause is now likely.

Below this level, a pivotal support looms at 1.2460. Next level to watch is 1.2415. Distant support comes at 1.2310

Good resistance is seen at 1.2570. Above it, the euro/dollar would encounter resistance at 1.2630 ??“ but I doubt it can get anywhere close to this level. Distant resistance is at 1.2715.

Oscillators are declining.

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

Dollar/yen
Dollar/yen surged further to reach a 10-month high on Tuesday. All eyes are on the psychological level at 120, where the world expects that knockout options lie; I??™d probably doubt that this is true. What I expect to see is an attack of this level to trip buy-stops. The rally should not exceed, say, 35 pips, and then the dollar/yen should pull back. Then, I??™d expect the Chinese + Detroit to complain that the yen is too weak??¦ The key level today is 119.65 from a 50-point pivot that targets 119.15 and 120.15.

Initial resistance comes at 120.15. That??™s followed by 121.10 and by a pivotal high at 121.40. Distant resistance is at 122.50.

Initial support is at 119.10. That??™s followed by 118.45. Next level is at 118.25 from another 50-point pivot that targets 117.75 and 118.75.

Oscillators are rising.

NEAR-TERM: Mixed
MEDIUM-TERM: Slightly bullish
LONG-TERM: Bearish

Sterling/dollar
Sterling/dollar fell again on Tuesday and reached a 2 1/2-month low. It briefly perforated the support at 1.8544 of the 61.8% Fibonacci retracement level of the July ??“ August uptrend. Only a close below this line would signal further losses.

Immediate support is at 1.8495. That??™s followed nearby by 1.8476 and then 1.8460. The 1.8390 area houses a Fibonacci retracement level.

Strong resistance looms at 1.8615 and that??™s followed by 1.8665. Distant resistance is pegged at 1.8740.

Oscillators are declining.

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

Dollar/Swiss franc
Dollar/Swiss closed higher for five of the past six days (that is if you call Monday a real trading day) and reached a 5 ??-month high on Tuesday.

Initial resistance comes from a medium-term Fibonacci retracement level at 1.2730. That??™s followed by 1.2766. Next big levels are 1.2830 and 12865. Distant resistance is at 1.2950.

Immediate support is at 1.2622. That is followed by 1.2575. Distant support is at 1.2495.

Oscillators are rising.

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

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