NEWS / Foreign Exchange

Yen and Swiss to weigh on the dollar..

Market overview

The broad weakness in the US dollar continued last week and, as expected, sterling dollar broke the 2.0651 key resistance and accelerated towards my 2.10 target. Whilst a consolidation may be in order, the trend is by no means over and should extend towards 2.12 into year end and 2.20 into Q1 2008.

The main currencies to watch this week are the Swiss franc and Japanese yen, both against the dollar. My target for dollar swiss is at 1.08 for Q1 2008 and this week should see some progress towards the 1.1300 level. Whilst the yen has traded in a range against the dollar, the potential for a break-out this week and move downwards to 112.00 have increased considerably. The equity markets continue to remain vulnerable and volatile swings in the Asian region may encourage some position squaring. The trigger to watch is at 113.68 as any breach could accelerate the dollar decline.