Friday November 5, 2004 - 13:19:48 GMT
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GFT Daily Forex Market Commentary Friday, November 05, 2004
GFT Daily Commentary by Cornelius Luca, currencies analyst, Global Forex Trading (source: https://www.gftforex.com/resources/daily.asp?date=1152004)
The dollar saw the expected selling pressure at a reduced pace on Thursday, but only versus the euro and the Swiss franc. Dollar/yen recovered from a new low for its downtrend, while the pound weakened under the burden of additional evidence that the UK housing bubble is deflating. The market is still digesting the unexpectedly strong Republican victory on Wednesday, which extended from President Bush to the Congress. Friday’s US unemployment data might provide a pretext to take some profit on short dollar positions. While very important, this report might have reduced market impact in post-electoral trading. Keep an eye on the falling oil prices and the bullish stock indices, as they could provide some impetus for the dollar.
Euro/dollar saw the expected additional rally on Thursday and managed to surpass the 1.2840 peak on its way to a new high for the uptrend at 1.2896. While the market sentiment remains positive, the pair is reaching stratospheric levels, and this increases the risk of a slide on profit taking. But don’t abandon your long positions without some confirmation that the euro/dollar has actually peaked.
This confirmation would come from a decline below 1.2840. There is a nearby support at 1.2816. It would take a break below 1.2755 to signal an aggressive decline into next week and to 1.2685. Once again, a break below this level would signal a retest of the 1.2630 low.
If the market chooses to go as long as ever into the weekend, then look for another test of the resistance at 1.2896. If this upmove accelerates further, then look for a challenge of the resistance at 1.2926. Distant resistance looms at around 1.3015, but such an aggressive upmove remains unlikely
Oscillators are rising.
NEAR-TERM: Mixed with downside risk
MEDIUM-TERM: Slightly bullish
LONG-TERM: Slightly bullish
Dollar/yen experienced further volatile trading on Thursday, but despite coining a marginally new low for the downtrend at 105.67, it closed virtually unchanged and provided little new direction.
Immediate support remains at the seven-month low of 105.67, with the key support nearby at the 105.60 from the 50-point pivot, which targets 105.10 and 106.10.
Once again, if the pair can recover above the 106.60 area, then look for another test of the key to 50-point pivot at 106.75, which targets 106.25 and 107.25. There is an intermediate resistance at 107.14.
Oscillators are mixed.
LONG-TERM: Slightly bearish
News that the UK housing prices fell 1.1 percent in October, the most in four years, prevented sterling/dollar from surpassing Wednesday’s 3 ½-month high of 1.8503. The pair headed lower in fact, but failed to engage in an aggressive profit-taking slide.
Below 1.8415, sterling/dollar should challenge the support at 1.8370. An unlikely break below this level would jeopardize the uptrend and the pair would test 1.8300. Distant support remains at 1.8192.
If it can resume its uptrend, the pound must break above 1.8503. A break higher would make a case for a test of the resistance at 1.8570. Above 1.8660,distant resistance remains at 1.8770.
Oscillators are rising.
LONG-TERM: Slightly bullish
Dollar/Swiss made the expected additional decline on Thursday and reached a new low for the downtrend at 1.1836. The pair trimmed its losses and this encourages hopes for at least a minor bounce on profit taking. However, hold short medium-term positions, provided that the resistance at 1.1940 holds.
If it manages to recover, dollar/Swiss franc must break above 1.1940 and then attempt to retest the resistance at 1.2000. Further resistance remains between 1.2090 and 1.2115. A break above this area would signal a further attack to 1.2200.
If this weakness persists, after all, then the pair should challenge its new low of 1.1836. A break below this level would signal a slide to 1.1757. Distant support now comes at 1.1670.
Oscillators are edging lower.
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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