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
DISCLAIMER: This forum and the information provided here should not be relied on as a substitute for extensive independent research before making your investment decisions. Global Forex Trading is merely providing this column for your general information. The views of the author are not necessarily those of Global Forex Trading, its owners, officers, agents or employees. In addition, any projections or views of the market provided by the author may not prove to be accurate. Global Forex Trading and Cornelius Luca will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this column. Global Forex Trading and Cornelius Luca do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.