Tuesday June 8, 2004 - 13:44:22 GMT
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Daily Forex Commentary by Global Forex Trading
Daily Commentary By Cornelius Luca, GFT Forex Analyst
The dollar sank across the board on Monday in a move led by dollar/yen. The decline was sparked by a 3% rally in the Nikkei 225. The decline seen on Monday seems to be overdone and exaggerated, so trading should be more sideways on Tuesday. Keep an eye on the New Zealand dollar, which is on the verge of triggering an inverse head-and-shoulders formation. If successful, the dollar could add to its losses. There are only German economic data to be released on the day.
Euro/dollar added to its Friday’s gains but its rate of advance decreased considerably. Expect another stab higher, but the failure to reach a new three-month high would translate in profit taking sales.
Above a Fibonacci retracement level at 1.2345, the pair still 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 1.2288 and then at 1.2250. If the latter level gives way, then look for support at 1.2215. If the profit taking sales pick up momentum, then look for a test of the 1.2140 area. Distant support remains at 1.2075.
Oscillators are rising.
MEDIUM-TERM: Mixed to slightly bullish
Dollar/yen made a collapsing decline on Monday in line with the daily candlestick chart signal. It faces critical support in the low 109 area and a break lower would accelerate the negative momentum.
The pair finds vital support at 109.15 from the 50-point pivot, which targets 109.65 and 108.65, and at 109.05 from the May 31 low. A break lower would open the gates to a test at 108.29.
The key level to watch on Monday remains at.
Initial resistance emerges at 110.08 from a Fibonacci retracement level. Distant resistance is now seen at 111.60 from the 50-point pivot that targets 112.10 and 111.10.
Oscillators are mixed.
NEAR-TERM: Mixed to slightly bearish
Sterling/dollar remains stuck choppy trading at the top of its recent upmove. It looks like the consolidation before a breakout, which, given its advantageous yield differential, should occur on the upside.
Above 1.8484, the pair still 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 accelerates, then expect a test at 1.8117.
Oscillators are edging higher.
Dollar/Swiss franc still remains under selling pressure after hitting a new low for the downtrend on Monday at 1.2344. All eyes remain on the target of a head-and-shoulders formation at 1.2160.
If this weakness continues on Tuesday, expect a test of the support at 1.2319. If this level gives way, then look for further support at 1.2265.
Dollar/Swiss franc still has initial resistance at 1.2450 and a break higher would target the 1.2570 level. 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
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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