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Daily Forex Market Commentary for October 13, 2006

Forex Market Commentary for October 13, 2006
GFT Daily Forex Market Commentary by Cornelius Luca


The dollar closed lower on Thursday, and not because of the US trade gap, which hit a new record high. Its worsening owes to old, high oil prices and to rising imports from China. The dollar is very overbought in the short term, so it should go down; weak retail sales or U Mich reports would provide an excellent pretext.

Euro/dollar
Euro/dollar closed higher on Thursday and that was high enough to signal a bullish reversal for the oversold pair.

Immediate resistance is pegged at 1.2575. The next level is at 1.2605. The resistance at 1.2635 is pretty strong, so if broken, the pair can rally further and fast. Only a close above 1.2650 means that the oversold condition was alleviated completely.

The support at 1.2525 should not be seen today. Only a break below the pivotal low at 1.2500 would signal that the euro/dollar will continue its aggressive decline without much of a recovery. There is another pivotal low at 1.2458.

Oscillators are declining.

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

Dollar/yen
Dollar/yen didn??™t have a chance to test the psychological 120 level and turned lower on Thursday. The key level remains the pivot at 119.65, which targets 119.15 and 120.15. There is more room on the downside.

Below 119.15 there is support at 118.60 and then at 118.25. A break below the 50-point pivot at 118.25 would target 117.75.

Above 119.82, resistance is seen at 120.15. That??™s followed by 121.10 and by a pivotal high at 121.40. Distant resistance is at 122.50.

Oscillators are rising.

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

Sterling/dollar
Sterling/dollar made a weak recovery on Thursday and remains oversold. The pair should advance further.

Immediate resistance looms at 1.8635 and 1.8660. If 1.8660 gives way, Cable will stretch to as high as 1.8735 and this would fully erase its oversold pressures. Distant resistance is at 1.8775.

Support now comes at 1.8540. Only a break below the pivotal low at 1.8515 would signal the resumption of the downtrend and the initial target would be the 1.8415 area.

Oscillators are declining.

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

Dollar/Swiss franc
Dollar/Swiss fell on Thursday and that was enough to turn the short-term outlook negative for the overbought pair.

Initial support is at 1.2655. That??™s followed by a very important level at 1.2610 ??“ a close below it would alleviate the overbought pressure and signal further weakness. Further support is at 1.2560.

Above 1.2715 there is pivotal resistance at 1.2742. Further resistance is at 1.2800. Distant resistance looms at 1.2835.

Oscillators are rising.

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

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