NEWS / Central Banks

Daily Forex Market Commentary for December 1, 2006

GFT Daily Forex Market Commentary for December 1, 2006
Forex Market Commentary by Cornelius Luca, Currencies Analyst, GFT


The dollar made a collapsing decline on Thursday, due to pure spec and rumored corporate orders. The weak US data did not help either. The rise in volatility and seemingly clear direction are comforting, but it is hard selling more US currency when is so heavily oversold in the short term. The charts were suggesting that the buck should benefit from short covering, but this failure only adds power to the negative medium-term outlook.

Euro/dollar
The overbought euro/dollar surged to an eight-month high on Thursday as completely ignored a bearish reversal formation on the candlestick chart. The medium-term outlook remains positive, but hold short-term long positions with tight stops.

Above 1.3274, resistance is seen at 1.3300. The next level is 1.3325. Distant resistance is at 1.3405.

Below 1.3215 the pair has support at 1.3145 and then at 1.3115. Only a break below 1.3115 would signal some sustained weakness toward 1.3060. Next level is 1.3010. Distant support is at 1.2890.

Oscillators are rising.

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

Dollar/yen
The dollar/yen gave back early gains and then fell sharply to return 50% of the gains made in the previous three days. The short-term outlook is cautiously negative.

Initial support is the strong 50-pip pivot at 115.50, which targets 115.00 and 116.00.

Above 115.95, resistance is seen at 116.35. The big level is at 116.85 by a 50-point pivot, which targets 116.35 and 117.35.

Oscillators are declining.

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

Sterling/dollar
Sterling/dollar surged a whopping 250 pips on Thursday to reach a +14-year high ??“ ah, the good old times of the ERM era! All eyes are on the 2.0000 level, of course, but do not hold your breath. The pair is heavily overbought; the upside is favored, but any little pretext can trigger an aggressive move down. Hold long positions with relatively tight stops.

Above 1.9700, resistance is at 1.9780 and 1.9815. Next level is 1.9915. Above the psychological 2.0000 level, distant resistance is at 2.0100

Initial support comes at 1.9600. It would take a break below 1.9560 to signal a decline toward 1.9490. Below 1.9425, distant support is at 1.9300.

Oscillators are rising.

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

Dollar/Swiss franc
Dollar/Swiss collapsed to a six ??-month low on Thursday and this stubborn weakness emphasizes the negative medium-term outlook.

Below 1.1976, pivotal support is at 1.1921. Distant support now rests at 1.1770.

Initial resistance is at 1.2015. Above 1.2060, the next level is at 1.2115. Distant resistances are at 1.2225 and 1.2275.

Oscillators are falling.

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

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