GFT Daily Market Commentary - Forex Forum

Forex Market Commentary for July 7, 2008 by Cornelius LucaGFT Daily Market Commentary


The dollar managed to recover aggressively on Friday and thus to end the week higher, but this only shows the nervousness of the market, as the reasons for strength were simply not there. The ECB met the market expectations and tightened borrowing costs by 25 bps to 4.25 percent, but then President Trichet signaled the ECB wasn't planning another rate rise, also as expected. Non-farm payrolls fell in June roughly as expected, but the revisions of the previous two months were horrendous. But the market was not about to vault euro/dollar to 1.6000 before the long weekend and the subsequent short covering of the US currency went out of hand. After initial strength, the US dollar should encounter choppy weakness.


Euro/dollar


Euro/dollar fell from a 2 ½-month high and closed lower last week, giving up a third of the rally between June 13 and July 3. My model went short. The market is on the verge here, after spearing the rising trendline in the non-market on Friday. Only a close below 1.5650 would encourage further weakness.

Below 1.5650, support is at 1.5605. The next good level is at 1.5685. Below 1.5630, further support remains at 1.5575.

Immediate resistance is at 1.5740. Above 1.5820, euro/dollar faces key resistance at 1.5905.

Oscillators are falling.


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



Dollar/yen


Dollar/yen rallied on Thursday, but my model remains short. Expect more choppy trading, as this pair is dancing to its own tunes. The level to give you initial direction is 106.75 from a 50-point pivot, which targets 106.25 and 107.25.

Resistance comes at107.25. Distant resistance remains at 107.95 from a 50-point pivot, which targets 107.45 and 108.45.

Initial support is at 106.25. Strong support remains at 105.60 from another 50-point pivot that targets 105.10 and 106.10. Distant support is at 104.50 from another 50-point pivot, which targets 104.00 and 105.00.

Oscillators are rising.


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



Sterling/dollar


Sterling/dollar made a bearish reversal, but I wouldn’t get too excited yet, as we need more information. My model went short. Just like the euro/dollar, cable pierced the rising trendline in extra-thin trading on Friday, but only a close below 1.9785 would encourage more sustained weakness.

Below 1.9785, support is now seen at 1.9745 and 1.9710. Distant support remains at 1.9605.

Initial resistance now comes at 1.9885. The next levels are 1.9940 and 2.0005. Above 2.0040, distant resistance comes at 2.0145.

Oscillators are declining.


NEAR-TERM: Mixed with downside bias
MEDIUM-TERM: Mixed
LONG-TERM: Mixed



Dollar/Swiss franc


Dollar/Swiss reversed from a 2 ½-month low on Friday and closed higher last week. My model went long, but the pair is only half way through the channel declining since May 8. A close above 1.0325, which is the former trendline rising since March 17, would encourage a more sustainable rally.

So, above 1.0325, resistance now comes at 1.0415 and 1.0450. Distant resistance comes at 1.0540.

Initial support is at 1.0215. Below 1.0166, support is seen at 1.0113, 1.0065 and .9996.

Oscillators are rising.


NEAR-TERM: Mixed with downside risk
MEDIUM-TERM: Mixed
LONG-TERM: Bullish





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