Wednesday July 19, 2006 - 13:14:56 GMT
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Daily Forex Market Commentary for July 19, 2006
Wednesday, July 19, 2006 8:00 GMT
Daily Forex Market Commentary
By: Cornelius Luca, Currencies Analyst, GFT
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The dollar rallied further on Tuesday against all the majors except for the pound, but all eyes will now be on Wednesdayâ€™s CPI report and Fed Chairman Bernanke's semi-annual testimony before Congress in hope for clues about the end of the tightening cycle.
The euro/dollar sank further to its lowest level since April 27 but trimmed some of its losses. The strength of the dollar combined with a very weak ZEW report.
Initial support is now from a new pivotal low at 1.2472. If this level gives way, the pair would test a Fibonacci retracement level at 1.2435. Distant support is still pegged at 1.2335.
Immediate resistance is at 1.2535 and thatâ€™s followed by 1.2575. Next level is 1.2605 from a Gann level. A close above the Fibonacci retracement level at 1.2645 would signal an aggressive recovery.
Oscillators are declining.
NEAR-TERM: Slightly bearish
Dollar/yen surged to a three-month high of 117.56 on Tuesday, thus reaching the upside target of 117.35 from the 116.85 50-point pivot. This level, which also targets 116.35 on the downside, remains the key technical level today.
Above 117.35, strong resistance follows at 118.25 from another 50-point pivot that targets 117.75 and 118.75.
Initial support is at 117.00. Next one is 116.65. Below 116.35, the pair has support at 115.70. Strong support remains at 115.50, from a 50-pip pivot, which targets 116.00 and 115.00.
Oscillators are rising.
Sterling/dollar was the exception to the rule and recovered about half of its Mondayâ€™s losses. Its recovery was triggered by a strong increase in the UK PPI. Its recovery was capped by the 60-day moving average and only a break above this line would signal another attempt to wipe out the Mondayâ€™s losses.
Initial support is at 1.8200. Below 1.8140, the pound would face the pivotal support at 1.8088. Just in case the pair sinks further, look for a test of the 1.8015 area.
Resistance remains at 1.8235 from the 60-day moving average and that is followed by from a Fibonacci retracement level at 1.8285. Only a break above this level would suggest an accelerated recovery to 1.8360.
Oscillators are falling.
Dollar/Swiss franc rallied further on Tuesday to 1.2554, the highest level since April 28.
Above this level, resistance is now seen at 1.2580. A break above this level would suggest a further rally to 1.2640. Distant resistance now looms at 1.2705 and 1.2750.
Support is pegged at 1.2480. Next level remains at 1.2435. Thatâ€™s followed by 1.2385 and 1.2340.
Oscillators are rising.
NEAR-TERM: Slightly bullish
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