Thursday March 22, 2007 - 12:52:44 GMT
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Daily Forex Market Commentary for March 22, 2007
GFT Daily Forex Market Commentary for March 22, 2007
Forex Market Commentary by Cornelius Luca, Currencies Analyst, GFT
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The dollar made a collapsing decline late on Wednesday on concern that the Federal Reserve may cut rates. In fact, the Fed kept its rate unchanged at 5.25%, as universally expected, and noted the recent weaker economic performance and higher inflation. However, it dropped language that covered the possibility that interest rates would be raised in the future. The slide was overdone, so the dollar should attempt to recover.
Euro/dollar surged to a two-year high in the wake of the Fed event. It has triggered a bullish flag, but I doubt it will go up without a pause.
Above 1.3385, the euro/dollar has resistance at 1.3435 and 1.3475. The pair then has distant resistance at 1.3610.
Initial support remains at 1.3345. Below 1.3315, the next level is seen at 1.3270. Distant support is at 1.3200.
Oscillators are rising.
The dollar/yen edged higher n Wednesday, as expected, but got stuck in an inside range. Since consolidation should continue, dollar/yen should edge lower today.
The pair had trouble climbing above 118.00, so the shortâ€“term long positions were unceremoniously squeezed out. There were two floors at 117.70 and 117.60 and once they broke, dollar/yen fell freely toward 117.00. But this level was well defended, and the pair found its footing above it.
Immediate support is at 117.00. The key support level is at 116.85 from a 50-point pivot which targets 116.35 and 117.35. Distant support I sat 115.50.
Initial resistance comes at 117.65. Strong resistance follows at 118.25 from a 50-point pivot that targets 117.75 and 118.75. Distant resistance follows 119.25 and then at 119.65.
Oscillators are mixed.
Sterling/dollar rallied for the sixth consecutive day and reached a 1 Â½-month high. The pair had been hurt only briefly early on Wednesday by news that the BoEâ€™s MPC voted 8-1 to keep its benchmark rate at a five-year high of 5.25 percent this month. The rally was overdone, so the pair should peak after the release of the UK retail sales report and slip on profit taking.
Initial resistance is at 1.9755 from a Fibonacci retracement level. Above 1.9830, resistance is pegged at 1.9915 from a pivot high.
Strong support is at 1.9650. Below 1.9545, the pair has further support at 1.9490. Distant support is now seen at 1.9375.
Oscillators are rising.
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Slightly bullish
Dollar/Swiss reversed early gains and closed lower on Wednesday. However, the pair remains stuck in last Fridayâ€™s range. More information is needed.
Support is still seen at 1.2070. Below a Fibonacci retracement level at 1.2030, dollar/Swiss franc has strong support at 1.2000. Below 1.1970, there is a pivotal low at 1.1901.
Initial resistance remains at 1.2150. If this level breaks, then the dollar should recover further to 1.2230. Distant resistance comes at 1.2290.
Oscillators are mixed.
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