Wednesday February 28, 2007 - 18:36:34 GMT
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Daily Forex Market Commentary for February 28, 2007
GFT Daily Forex Market Commentary for February 28, 2007
Forex Market Commentary by Cornelius Luca, Currencies Analyst, GFT
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The dollar closed sharply lower on Tuesday. The initial slide came against the yen, as Japanese officials attacked carry trades. The next move came after the volatile durable goods orders fell 7.8% in January because of a 60.3% drop in civilian airliner orders. Then, the dollar had a reprieve after the Conference Board's index rose to 112.5 in February from 110.2. But the slide in the Chinese stock market triggered an aggressive correction in the US equity markets and the dollar fell further. It only kept its own against the pound, which weakened after Bank of Englandâ€™s Blanchflower said the bank expects the currency to decline in the next two years. After a brief recovery, the dollar should fall further.
Euro/dollar surged further on Tuesday to reach is highest level since January 2. Following some minor corrective pullback, the pair should try to make another move higher.
Above the high of 1.3258, the pair has strong resistance from a pivotal top at 1.3296. Further resistance looms at 1.3325 and 1.3367.
Immediate support is at 1.3197. Below 1.3135 support is now at 1.3080.
Oscillators are rising.
NEAR-TERM: Mixed with bullish bias
MEDIUM-TERM: Mixed with bullish bias
Growing concern that the carry trades are out and the US economy is slowing tossed dollar/yen in a nearly free fall on Tuesday. The pair hit a 2 Â˝-month low. The weakness is in line with the bearish reversal formation from Friday. Following a brief recovery today, dollar/yen should attempt a further downmove. Key support is at 118.25 from another 50-point pivot that targets 117.75 and 118.75.
Below 117.53, support comes from a 50-point pivot at 116.85, which targets 116.35 and 117.35. Distant support is at 115.50.
Above 118.75, strong resistance follows at 119.65 from a 50-pip pivot, which targets 120.15 and 119.15.
The pound encountered very choppy trading on Tuesday. The BoE comments (see above) forced it to give up gains that took it to a near two-week high. The immediate outlook is mixed.
Initial resistance remains at 1.9675. A pivotal high follows at 1.9748. Above 1.9775 there is resistance at 1.9810.
Below 1.9590, the pound still finds support at 1.9565. A break below 1.9500 would signal a decline to 1.9403.
Oscillators are rising.
Dollar/Swiss franc collapsed on Tuesday and easily reached and surpasses the target of the head-and-shoulders formation at 1.2195. Following a brief bounce, the pair should take another swing at the downside.
Below 1.2145, support is now seen at 1.2100. Strong support then comes at 1.2030. Distant support is at 1.1880.
Above 1.2230, resistance is stacked at 1.2305. Next level is 1.2370.
Oscillators are falling.
NEAR-TERM: Mixed to slightly bearish
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