Monday June 7, 2004 - 13:03:20 GMT
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Daily Forex Commentary by Global Forex Trading
The stronger-than-forecast non-farm payrolls report and slipping oil prices failed to provide much support for the dollar on Friday, and the European currencies rallied broadly. Of concern to some now is the unlikely risk that the Fed will hike rates more than twice this year, arresting the economic recovery. The weekly closing suggests further overall dollar losses this week, but some pullback on profit taking should be seen. There is no economic data to be released on Monday.
Euro/dollar managed to pull off a strong recovery on Friday and to close at a three-month high.
Above a Fibonacci retracement level at 1.2345, the pair has pivotal resistance at 1.2387 and a close above this level would be very bullish. The euro/dollar could then advance to 1.2433.
The pair has initial support at 1.2250 and then at 1.2220. If the latter level gives way, then look for support in the 1.2140 area. The next level to watch is 1.2075.
Oscillators are rising.
NEAR-TERM: Mixed to slightly bullish
MEDIUM-TERM: Mixed to slightly bullish
Dollar/yen spiked up to its highest levels seen yet this month on concern that the increasing oil bill will hurt the yen. However its recovery was not very convincing, and it would take a close above the 20-day moving average, now at around 112.11 would confirm further gains. In fact, dollar/yen should first head lower on Monday.
The key level to watch on Monday remains the 50-point pivot at 111.60, which targets 112.10 and 111.10.
The pair still finds support at 110.08 from a Fibonacci retracement level. Good support remains at 109.15 from the 50-point pivot, which targets 109.65 and 108.65.
Above the 20-day moving average, the pair faces a strong (and distant) obstacle at 112.90 from another 50-point pivot, which targets 113.40 and 112.40.
Oscillators are mixed.
NEAR-TERM: Slightly bearish
Sterling/dollar struggled on Friday in very choppy trading but remained hemmed in to the top of its recent upmove and closed at a three-month high.
Above 1.8484, the pair has resistance at 1.8511 and a break higher this week would target the resistance levels at 1.8603.
Sterling/dollar has initial support at 1.8350 and then at 1.8312. A break lower on profit taking would target the 1.8200 area. If the correction accelerated, then look for a test at 1.8117.
Oscillators are edging higher.
Dollar/Swiss franc remains under selling pressure once again after melting on Friday to a 3 1/2-month low of 1.2372. All eyes are now on the target of a head-and-shoulders formation at 1.2160.
If this relentless weakness persists, then look for the pair to test the support at 1.2319. If this level gives way, then look for further support at 1.2265.
Dollar/Swiss franc has initial resistance at 1.2450 and then at 1.2570. A break above a Fibonacci retracement level at 1.2583 would encourage a rally to 1.2760.
Oscillators are falling.
NEAR-TERM: Mixed to slightly bearish
MEDIUM-TERM: Mixed to slightly bearish
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