NEWS / Fiscal Policy, Budget

Daily Forex Market Commentary for October 30,2006

GFT Daily Forex Market Commentary
Forex Market Commentary for October 30, 2006 by Cornelius Luca


The dollar fell sharply on Friday as well, following a weak GDP report and rumors of further foreign central bank adjustment of holdings away from dollars. The dollar should consolidate and even edged higher today before encountering further weakness.

Euro/dollar
Euro/dollar surged to a three-week high of 1.2749 on Friday. The short term argues for further strength, because the resistance of a two-month old trendline was broken on a closing basis. However, but the medium term remains mildly negative.

Above 1.2765, the pair would encounter resistance at 1.2830. Strong resistance is then seen at 1.2880. Distant

If 1.2765 holds on a closing basis, expect the euro/dollar to pull back and challenge the support at 1.2660.

Oscillators are rising.

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

Dollar/yen
The dollar/yen fell sharply on Friday, briefly piercing the support of a trendline rising since August 4, but managing to form a double top formation, which targets the 116.00 area. Please note the high for the week, which is a Gann pivot point.

Initial support is 117.14. Dollar/yen then has support at 116.85 by a 50-point pivot, which targets 116.35 and 117.35.

Above 117.90, the pair sees resistance at 118.25 from another 50-point pivot that targets 117.75 and 118.75. Strong resistance is at 119.86. If the defense of the KO options at 120 is somehow surpassed, which I strongly doubt, expect heavy hunting for stop-loss orders.

Oscillators are declining.

NEAR-TERM: Mixed with bearish bias
MEDIUM-TERM: Slightly bullish
LONG-TERM: Bearish

Sterling/dollar
Sterling/dollar rallied again on Friday, reaching a three-week high of 1.9002. There is strong resistance at 1.9023 and only a close above it would warrant more strength.

Above 1.9023, pivotal resistance comes at 1.9075. Further resistance is at 1.9130 from the target of a bullish flag and a 1.9145 from a pivot high.

Immediate support is at 1.8910. That is followed by 1.8865.

Oscillators are rising.

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

Dollar/Swiss franc
Dollar/Swiss fell sharply on Friday as well and this dragged it reached a three-week low of 1.2467. Right at Friday??™s lows there is the support of a trendline rising since May 19. Only a close below it would chuck the uptrend and call for more short-term losses.

Below 1.2467, dollar/Swiss franc has support at 1.2410. A close below the strong 1.2380 level would accelerate the decline.

Initial resistance is at 1.2530. That is followed by 1.2590. Above 1.2635, the pair has resistance at 1.2680.

Oscillators are falling

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

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