NEWS / European Community

Daily Forex Market Commentary for November 1, 2006

Forex Market Commentary for November 1, 2006
GFT Daily Forex Market Commentary by Cornelius Luca


The dollar made the expected upmove only through 10:00 ET on Tuesday, but then collapsed under the weight of weak US economic reports; both the Chicago PMI and the Consumer Confidence painted a grim outlook for the economy. The dollar should remain under pressure, as the ISM report should not be that good.

Euro/dollar
Euro/dollar reversed early losses on Tuesday and smashed its way out of an inside range on its way to a five-week high. It should edge higher, as most of the rally has already been exhausted.

Above 1.2830, the pair has resistance at 1.2880. Distant resistance is then seen at 1.2940.

Below 1.2750, the euro/dollar has support at 1.2700 and at 1.2660. Next supports remain at 1.2625 and 1.2590..

Oscillators are rising

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

Dollar/yen
The dollar/yen made the expected recovery through early US trading, briefly vaulting above 118.00, but then reversed these gains and collapsed to a five-week low. More weakness is likley, but at a slower pace.

Initial support is 116.35. Dollar/yen then has support at 116.00 and 115.50.

Immediate resistance is at 116.85 from a 50-point pivot, which targets 116.35 and 117.35. Above 117.75, the pair sees resistance at 118.25 from another 50-point pivot that targets 117.75 and 118.75.

Oscillators are declining.

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

Sterling/dollar
Sterling/dollar reversed early losses to surge to a near three-month high. More strength should be in store, as the market is also betting on a BoE rate hike next week.

There is a pivotal high at 1.9144. Above it, Cable has distant resistance at 1.9210 and 1.9250.

The pound has support at 1.9040. If this breaks, then look for a retracement to 1.8955. Only a break below 1.8920 would signal the formation of a peak. The pair would then decline further toward the 1.8800 area.

Oscillators are rising.

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

Dollar/Swiss franc
Dollar/Swiss reversed the gains it made early in the day and fell to a five-week low. More weakness is in store, but at a reduced pace.

Key support is at 1.2404. A break below this trendline would suggest a further decline to 1.2340 and 1.2290. Dollar/Swiss franc has distant support at 1.2230.

Initial resistance is at 1.2440. That is followed by 1.2480. The pair then has resistance at 1.2527.

Oscillators are falling

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

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