Wednesday May 12, 2004 - 15:20:55 GMT
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GFT - Tuesday May 11, 2004
Daily Forex Market Commentary Wednesday, May 12, 2004 8:00 GMT
By Cornelius Luca
Tuesday was a mixed day for the dollar, as the traders reevaluated strategies and crosses took the upper hand. It gave up its gains made against the euro and the Swiss franc, slipped versus the yen and rallied against the pound. The US trade deficit report should not be able to trigger much of a change, so expect the dollar to consolidate further on Wednesday.
Euro/dollar rebounded on Tuesday from a two-week low of 1.1787 but it remains under overall selling pressure.
Below this new low for the move, the pair has support at 1.1759. A break below this level would signal a move down to the support area at 1.1695 and then at 1.1600.
Any recovery should once again hit immediate resistance at 1.1891 and then at 1.1921. If it continues to strengthen, expect once again a test of the strong resistance from the 200-day moving average at 1.1971. An unexpected break higher would likely accelerate the upmove to 1.2000.
Oscillators are edging lower.
Dollar/yen should grind lower still on Wednesday on profit taking after surging on Monday to an eight-month high of 114.12.
The pair has support from a Fibonacci retracement level at 112.06. Further below there is strong support at 111.60 from the 50-point pivot that targets 112.10 and 111.10.
Dollar/yen has immediate resistance at 112.90 from the 50-point pivot that targets 113.40 and 112.40. Above 112.40, there is resistance at 113.67 and then there is the pivotal 114.12 high. Distant resistance comes at 114.20 from a 50-point pivot, which targets 113.70 and 114.70.
Oscillators are mixed.
Sterling/dollar fell further on Monday, buckling under the weight of poor economic data. The pair finally smashed the support at 1.7700 on its way to a five-month low of 1.7531.
Any recovery would face initial resistance comes at 1.7670 and then at 1.7700. A break higher would target 1.7815 and then 1.7875. Further strength would accelerate this recovery to 1.7950 and even 1.8016.
Sterling/dollar has support at 1.7531 and a break lower would signal a decline to 1.7490 and then to 1.7427. Further support lies at 1.7354.
Oscillators are mixed.
Dollar/Swiss franc failed once again to penetrate the ceiling at 1.3100 and pulled back to its 20-day moving average, now at around 1.2983.
Above 1.3083, Tuesday’s high, the pair has good resistance at 1.3100. Further strength would target 1.3160 and then the pivotal resistance at 1.3226.
Dollar/Swiss franc has good support at 1.2912 and a break lower would target 1.2882 and then at 1.2830.
Oscillators are mixed.
MEDIUM-TERM: Mixed to slightly bullish
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