NEWS / Central Banks

Daily Forex Market Commentary for October 18, 2006

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


The dollar fell broadly on Tuesday amid a very strong TIC data report, a very strong core PPI and a very weak industrial production reading.It hit strong supports and the odds are that it will see some recovery on wednesday.

Euro/dollar
Euro/dollar strugled higher Tuesday as well but remained well within Friday's range. It should chop around some more, with the downside marginally more favored.

Initial support is at 1.2470. Next support comes at 1.2410. A close below this level would also trigger a double top formation, which targets 1.1920. But that??™s far, far away. Below 1.2370, support now comes at 1.2310.

Above 1.2576, the euro/dollar has resistance at 1.2615. Strong resistance follows at 1.2650.The pair must close below the strong support at 1.2470 to confirm versus weakness.

Oscillators are declining.

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

Dollar/yen
Dollar/yen fell for the second day and hit an 11-day low on Tuesday. It recovered most of its losses after finding support at 118.54, so Wednesday should see an attempt of recovery.

Initial resistance is at 119.00. The key level resistance is at 119.65 from a 50-point pivot that targets 119.15 and 120.15. Above 120.15, resistance is seen at 120.50. Further resistance is the pegged at 121.05 from another 50-point pivot that targets 120.55 and 121.55.

Dollar/yen has support at 118.25 by 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 rallied to an 11-day high on Tuesday and is now testing the resistance of the resistance declining since September 25. It moved too high too fast, so it should now edge lower.

Immediate support is now seen at 1.8660. That??™s followed by 1.8600 and 1.8555.

Initial resistance is seen at 1.8734. Above 1.8770, resistance comes at 1.8800 and 1.8860.

Oscillators are declining.

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

Dollar/Swiss franc
Dollar/Swiss sank to a one week-low on Tuesday, as expected. It pulled back after briefly piercing the support from a rising trendline, so it should see some strength today.

Initial resistance is at 1.2710. Above 1.2768, the pair still has resistance at 1.2800. Next level is at 1.2910.

Below 1.2640, dollar/Swiss franc has support at 1.2590. Distant support is at 1.2500.

Oscillators are rising.

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

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