Tuesday July 27, 2004 - 12:15:48 GMT
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Daily Forex Commentary by Global Forex Trading
Daily Commentary By Cornelius Luca, forex analyst, Global Forex Trading
The dollar edged lower on Monday but achieved little else expect for consolidating further within Thursday’s boundaries. The better than forecast sales of existing homes helped the dollar pair losses. Tuesday will see the release of several bits of significant data: Germany’s Ifo Survey and the US New Homes Sales and Consumer Confidence. Watch out as they have ability to shake up the markets. If they fail, then look for a pullback.
The euro/dollar made a weak recovery on Monday that didn’t recover even half of its
sharp losses on Friday. It’s likely that it will swerve around the 60 and 100-day moving averages in the area of 1.2130 to 1.2145.
A break above this area would signal a rally to the resistance at 1.2171 and an unexpected break higher would target 1.2200. A further upmove to 1.2265 is unlikely.
If the resistance area formed by the above averages holds, then look for a decline to the support levels at 1.2100 and 1.2088. A break below 1.2050 calls for a test of 1.2000.
Oscillators are falling.
Dollar/yen recovered early losses on Tuesday but continues to remain trapped in last Wednesday’s range of 108.36 to 110.30.
Above 110.30, resistance remains at 110.50 from the important 38.2% Fibonacci retracement level of the uptrend between April and May. An unexpected break higher would then challenge the 61.8% Fibonacci retracement level of the downtrend between May and June at 111.00.
Below 109.40, the key support remains from the 50-point pivot at 109.15, which targets 109.65 and 108.65. A break lower would target 108.50 and then 108.08.
Oscillators are rising.
MEDIUM-TERM: Slightly bullish
Supported by its advantageous yield differential, sterling/dollar recovered most of its sharp losses on Friday. However, only a break on a closing basis above the rising 20-day moving average, now at around 1.8450, would signal further gains.
Above 1.8450, the pair has resistance at 1.8536. A rally to 1.8688 is very unlikely for Tuesday.
There is little support ahead of 1.8318 and a break lower would call for a test first of the 1.8298 level and then of the 1.8276 level. Further support is at 1.8220. Distant support is provided by a Fibonacci retracement level at 1.8125.
Oscillators are falling.
MEDIUM-TERM: Slightly bearish
LONG-TERM: Slightly bullish
Dollar/Swiss franc pulled back on Monday on profit taking after exploding higher on Friday, but remained not only within an inside range, but also in a rising channel.
If this strong rally persists, then the pair will close above the resistances from its 100-day moving average at around 1.2684 and from the 1.2701 peak. If it succeeds, then look for an aggressive rally to 1.2785.
If the upmove fades away, then the dollar/Swiss franc will fall to test the immediate support at 1.2589. A break lower would then challenge the 1.2500 area.
Oscillators are rising.
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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