Forex Market Commentary for January 5, 2007 by Cornelius Luca

GFT Daily Forex Market Commentary 

The dollar surged further on Thursday versus the European currencies, but fell against the yen. This means the carry trades are feeling some heat, but it is premature to signal their demise.  All eyes are on the US non-farm payrolls, and this report rarely fails to surprise. Try to react quickly after the revisions are clear.  

 
Euro/dollar

The euro/dollar sank aggressively on Thursday after forming a bearish reversal formation a day earlier.  It is approaching a pivotal bottom, so only a break below would signal another run on the downside. 
 
The pivot comes at 1.3045. The next important level is at 1.2995.  There is distant support at 1.2925

Above 1.3115, euro/dollar has strong resistance between 1.3135 and 1.3145. Strong resistance follows at 1.3200.  Distant pivotal resistance is at 1.3296. 

Oscillators are falling.

 
NEAR-TERM: Mixed with risk of either way breakout
MEDIUM-TERM: Mixed 
LONG-TERM:  Bullish

 
Dollar/yen

Dollar/yen fell sharply in Asia on Friday, and the upside looks well defended. Only a close above 120 would warrant sustained gains but this is unlikely now.
 
Immediate support is at 118.25 from another 50-point pivot that targets 117.75 and 118.75.  Further support is at 117.10.

Above 118.75, the pair retains strong resistance at 119.65 from a 50-pip pivot, which targets 120.15 and 119.15. 

Oscillators are mixed.

  
NEAR-TERM: Mixed with bearish bias
MEDIUM-TERM: Bullish
LONG-TERM: Bearish

Sterling/dollar

 
Sterling/dollar made another collapsing decline on Thursday after forming a bearish reversal the previous day and reached the lowest levels since late November. The downside looks limited. 

Initial and crucial support comes at 1.9340.  This level needs to break if the downmove continues.  If it gives way, then brace your self for a further bout of weakness to 1.9225.

Initial resistance is at 1.9435. Above 1.9485, resistance is seen at 1.9540 and 1.9595. Sterling/dollar then distant resistance at 1.9640. 
 
Oscillators are falling.
 

NEAR-TERM: Mixed with risk of either way breakout
MEDIUM-TERM: Mixed with bullish bias
LONG-TERM:  Mixed                                                          

                                             
Dollar/Swiss franc

Dollar/Swiss franc rallied further on Thursday to a new high for the uptrend and tested strong resistance at 1.2325.  Only a clear move above it would signal a further sharp rally.

Above 1.2325, resistance is seen at 1.2365. Distant resistance looms at 1.2430. 

Immediate support is at 1.2270.  1.2220 and 1.2180 follow that. Distant support looms at 1.2115.    
 
Oscillators are mixed.

 
NEAR-TERM: Mixed with risk of either way breakout
MEDIUM-TERM: Mixed with bearish bias
LONG-TERM: Mixed