Thursday July 8, 2004 - 13:10:34 GMT
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Daily Forex Commentary by Global Forex Trading
The dollar failed to recover on Wednesday and this failure translated into a collapsing decline against the European currencies. Meanwhile, it made the expected downmove versus the yen. The dollar is oversold in the short term, so it should post some mild recovery on Thursday. Given its recent weakness, buy the dollar only if it confirms its recovery.
Euro/dollar surged to a four-month high of 1.2388 on Wednesday and this unexpected rally is testing the top of its slowly rising channel.
Above 1.2388, the pair now has resistance at 1.2433. This level should be able to cap any further demand on Thursday. However, a break higher would signal an upmove to 1.2540. Distant resistance looms at 1.2710.
Any pullback would face support at 1.2320. A break lower would target 1.2265 and a move lower would mean that the rally is over for now. Below 1.2240, support is still seen at around 1.2160. A break lower to the 1.2100 area, but this slide would be very unexpected.
Oscillators are rising.
Dollar/yen headed lower on Wednesday and dipped briefly below the 200-day moving average at around 108.55. It should now struggle to recover some of its losses
The key resistance level to watch remains the 109.15 pivot, which targets 109.65 and 108.65.
Any additional recovery would once again face a strong obstacle at 109.65/109.71. A move to the 110.00 area remains difficult.
Below 108.16, dollar/yen now faces further support at 108.00. Key support is at 107.95 from a 50-point pivot that targets 107.45 and 108.45.
Oscillators are mixed.
MEDIUM-TERM: Slightly bearish
Sterling/dollar soared to a three-month high of 1.8577 on Wednesday and this upmove triggered an inverse head-and-shoulders formation. This bullish pattern is targeting the 1.9400 area. For now, the rally seems to be overdone and there is a good chance that the pair will sell off on Thursday after the Bank of England leaves rates on hold.
The pair has initial support at 1.8435 and a break lower would signal a decline to 1.8345. If the decline accelerates, then look for a test of the 1.8305 and 1.8275 levels. A decline to 1.8180 remains very unlikely.
Above 1.8577, the sterling/dollar has resistance from the 1.8603 level. A break above this level signals a rally to 1.8747.
Oscillators are rising.
MEDIUM-TERM: Slightly bullish
LONG-TERM: Slightly higher
Dollar/Swiss franc remains under general selling pressure after sinking to a new 4 1/2-month low on Wednesday. However, some mild recovery should be seen on Thursday.
The pair has resistance only at 1.2365 and a break higher would signal an upmove to 1.2420. Thatís followed by 1.2490 and a break higher signals a re-test of the 1.2570 area.
If the decline continues, dollar/Swiss franc should break the support at 1.2252 and accelerate this decline toward 1.2180. If this level also breaks, then look for a test of the further support at 1.2160, which is the target of head-and-shoulders formation.
Oscillators are falling.
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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