Monday August 9, 2004 - 13:11:39 GMT
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Daily Forex Commentary by Global Forex Trading
Daily Commentary By Cornelius Luca, forex analyst, Global Forex Trading
The dollar plunged on Friday after the abysmal jobless reports that sheds an unflattering light on the US economic recovery. The Fed will tighten borrowing costs on Tuesday, but itís unlikely that it hike rates at the same pace through the end of the year. The dollar should bounce on Monday on profit taking, but the selling pressure should continue.
The euro/dollar traded sideways for most of the past week but still managed to spike down on Wednesday to a seven-week low of 1.1968 as it slowed down its descent. On Friday, however, it surged about 240 pips. The pair formed a bullish reversal formation on the weekly chart, which means that this week will see further overall gains.
Monday should see some consolidation but euro/dollarís inability to pull back at all on Friday suggests that this corrective decline will be very shallow.
Any pullback will target the Fibonacci retracement level at 1.2215. A break lower would then make a case for a test of 1.2156. If the decline accelerates, which is very unlikely, then the euro/dollar will challenge the 1.2118 level.
The first resistance comes at 1.2342 from a Fibonacci retracement level and a break higher would target 1.2378. If the rally accelerates then the euro/dollar will target the pivotal 1.2460 high and then the resistance at 1.2482 from another Fibonacci retracement level.
Oscillators are rising.
Dollar/yen melted on Friday under intense 20 minutes of sales. It should see some mild recovery before experiencing any further decline.
Above110.80 and the 50% Fibonacci retracement level at 111.00, the key barrier to break will be the 111.60 50-point pivot, which targets 112.10 and 111.10.
Immediate support is now seen in the 110.00 area and a further break lower would target the 50-point pivot at 109.15 that targets 109.65 and 108.65. There is a pivotal support at 108.08.
Oscillators are declining.
NEAR-TERM: Mixed to slightly bullish
MEDIUM-TERM: Slightly bullish
Sterling/dollar exploded to a two-week high of 1.8464 on Friday immediately after the US data release. It closed only marginally above its 20-day moving average, so it needs to advance further to confirm this strength. It should first pull back before experiencing any further rally.
Any decline should test the initial support at 1.8356 and then1.8333, and a break lower would signal a decline to the 1.8250 area.
Once the rally accelerates, then look for a test of the Fibonacci retracement level at 1.8483. A break higher would then target 1.8511 and further resistance comes at 1.8660.
Oscillators are rising.
MEDIUM-TERM: Slightly bearish
LONG-TERM: Slightly bullish
Dollar/Swiss franc slumped to a two-week low of 1.2492on Friday. The pair also formed a bearish reversal formation, so further weakness should follow. However, it should benefit from some profit taking on Monday.
Any recovery above 1.2550 would find resistances at 1.2595. However, only a break above the 1.2700 area would mean that the downmove is over, but this is unlikely.
Below 1.2492, the pair has support at 1.2468 from the Fibonacci retracement level of the July 16 Ė August 4 upmove and a break lower would challenge the 1.2400 area.
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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