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Daily Forex Market Commentary for December 5, 2006

GFT Daily Forex Market Commentary for December 5, 2006
Forex Market Commentary by Cornelius Luca, Currencies Analyst, GFT


The dollar consolidated in a tight range and closed little changed on Monday after making a sharp decline on Friday. The short-term charts still suggest that the dollar should bounce on short covering, whilethe medium-term outlook remains negative. Therefore, take profit on dollar short positions only if confirmed.

Euro/dollar
The overbought euro/dollar coined a marginally new 21-month high on Monday but closed virtually unchanged. The medium-term outlook remains positive, but the heavily short-term overbought conditions suggest a pullback.

Above 1.3367, strong resistance remains at 1.3413 and then at 1.3495. That should be it ??“ at the most.

If the pair turns lower on profit taking, look for a test of the support at 1.3285. The next level is 1.3235 and a break of this level would warrant a more sustained decline. Below 1.3150 euro/dollar has distant support at 1.2985.

Oscillators are rising.

NEAR-TERM: Mixed with bearih bias
MEDIUM-TERM: Bullish
LONG-TERM: Bullish

Dollar/yen
Dollar/yen traded sideways and closed unchanged on Monday after sinking to a near four-month low on Friday. The medium-term outlook is negative, but the short-term bias is upward.

The key resistance is the 50-pip pivot at 115.50, which targets 116.00 and 115.00. Above 116.00, the pair should be capped at 116.85 by a 50-point pivot, which targets 116.35 and 117.35.

Below 115.00, dollar/yen has support at 114.20 from another pivot, which targets 113.70 and 114.70.

Oscillators are declining.

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

Sterling/dollar
Sterling/dollar traded sideways and closed virtually unchanged on Monday but held near the 14-year high reached a day earlier. The medium-term outlook remains positive, but in the short term, the pair should make a corrective pullback.

Initial support comes at 1.9740. Below the strong 1.9695 level , there is support at 1.9640 and then at 1.9540.

Above 1.9846, resistance remains at 1.9985. A break above the psychological 2.0000 mark is unlikely, but in trading everything is possible.

Oscillators are rising.

NEAR-TERM: Mixed with bearish bias
MEDIUM-TERM: Bullish
LONG-TERM: Bullish

Dollar/Swiss franc
Dollar/Swiss franc consolidated quietly on Monday after falling to a 1/1 2-year low a day earlier. The medium-term outlook remains clearly negative, but the oversold pair may benefit from some profit taking today or Wednesday.

Initial resistance is at 1.1995. Next level is at 1.2050. Above 1.2135, next levels are at 1.2160 and 1.2200.

Immediate support is at 1.1900. Strong support follows at 1.1795 from a pivot low.

Oscillators are falling.

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

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