Thursday October 7, 2004 - 13:16:34 GMT
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Daily Forex Market Commentary Thursday, October 07, 2004 from GFT
Daily Commentary by Cornelius Luca, forex analyst, Global Forex Trading (source: http://www.gftforex.com/resources/daily.asp?date=1072004)
The pound led the European currencies lower versus the dollar on Wednesday. Even dollar/yen shed its contrarian role and edged higher. The dollar found support from the rallying US stocks, as the Nasdaq has rallied sharply during the past several days. The upmove was underpinned by St. Louis Fed President Poole, who suggested that the rate tightening cycle should surpass the range of 3 to 5 percent, which delimits fed funds neutrality. The dollar upmove seems overdone, but take your cues from the pound. Continue to expect mixed trading ahead of release of the vital US unemployment report on Friday.
The inability of the euro/dollar to pad its mild recovery from Tuesday translated into a decline to a 12-day low of 1.2245.
The pair trimmed some of these losses, so only a break below of 1.2245 would send the euro/dollar to 1.2210. Further support comes at 1.2165 and an unexpected slide below this support would encourage a test at 1.2115.
Any recovery would face resistance at 1.2325, but only a break above the resistance at 1.2360 would accelerate this recovery and re-place the euro/dollar back into a rising channel. The pair would then challenge the 1.2410 level. The euro/dollar should not reach the pivotal highs at 1.2442 and 1.2460 at this point.
Oscillators are edging lower.
LONG-TERM: Slightly bullish
Dollar/yen rallied for the fourth consecutive day on Wednesday, and this time it managed to pierce briefly the resistance at the 111.40 level. Profit taking trimmed some of these gains, but the strongest closing of the uptrend suggest that further gains are in store. Once again, the upside remains in play for as long as the pair holds above the Fibonacci retracement level at 111.00.
If successful in breaking above 111.40 in a more convincing way, dollar/yen will challenge the pivotal resistance at 111.70. Key resistance remains slightly lower at 111.60 from the 50-point pivot, which targets 112.10 and 111.10.
Only a break below 111.00 would signal a decline of the support at 110.55. A break below this level would challenge 110.25. There is some support at 109.95 and strong pivotal support at 109.80. Distant remains at 109.15 from a 50-point pivot that targets 109.65 and 108.65.
Oscillators are heading higher.
MEDIUM-TERM: Slightly bullish
LONG-TERM: Slightly bearish
Sterling/dollar made the expected recovery in early trading and rallied as high as 1.7886. This bounce was short lived, however, as the pair proved once again to be the weakest of the major European currencies, hitting a three-week low of 1.7744 on Wednesday.
It the recovery persists, then look for a test of the nearby resistance at 1.7830. A break above this area would open the gates to a re-test of 1.7886. Further up, the pair would still face a barrier at 1.7925. A break above this level would signal a test of the next resistance at 1.7975. Above 1.8030, good resistance levels remain at 1.8080 and then at 1.8160.
If it resumes its losing ways, sterling/dollar would find good support between 1.7745 and 1.7738. If this area gives way, then look for a sharp decline below 1.7706 and toward 1.7600, but this weakness should not be seen today.
Oscillators are declining.
LONG-TERM: Slightly bullish
Following its unimpressive decline on profit taking on Tuesday, dollar/Swiss franc resumed its upmove and hit a two-week high of 1.2680. Profit taking lightened these gains, so the pair must break above this high to attract further demand.
If successful, then the dollar/Swiss franc should take a stab at 1.2712 and then test the pivotal high at 1.2772.
The pair needs to break below 1.2600 to signal that the medium-term weakness has resumed. The pair would then slide further to challenge the support at 1.2525. Only a break below this level would signal a test of the pivotal low of 1.2443.
Oscillators are rising.
DISCLAIMER: This forum and the information provided here should not be relied on as a substitute for extensive independent research before making your investment decisions. Global Forex Trading is merely providing this column for your general information. The views of the author are not necessarily those of Global Forex Trading, its owners, officers, agents or employees. In addition, any projections or views of the market provided by the author may not prove to be accurate. Global Forex Trading and Cornelius Luca will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this column. Global Forex Trading and Cornelius Luca do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.
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