GFT Daily Market Commentary
The dollar trimmed losses following a sharp drop in crude oil, but these pullbacks don’t usually hold, so expect some Nigerian rebels or Iranian bellicose statements to boost energy prices soon. Fannie Mae and Freddie Mac remain a major problem, as the financial system is dire straights. Expect the dollar to attempt a recovery today, but the medium-term outlook remains bearish. And if you doubt that, take a look at the US indices. The US economic agenda includes the CPI and industrial production reports.
Euro/dollar
Euro/dollar fell from a record high to close flat on Tuesday, but remains above the 23.6 Fibonacci retracement level at 1.5863, despite the horrible ZEW report. My model remains long. The short-term outlook is slightly bearish, but the medium-term outlook is positive.
Below 1.5860, support is seen at 1.5765. The next good level remains at 1.5685. Distant support is 1.5630.
Immediate resistance is still seen at 1.5970. A new pivot high now follows at 1.6036. Above 1.6055, euro/dollar faces resistance at 1.6135.
Oscillators are rising.
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Bullish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen sank to a 1 ½-month low in aggressive trading, but managed to reduce some of its losses with help from a short-term declining channel line. The pair should attempt to continue its recovery.
Immediate resistance is at 104.95. Strong resistance moved down to 105.60 from a 50-point pivot that targets 105.10 and 106.10. Distant resistance is at 106.75 from a 50-point pivot, which targets 106.25 and 107.25.
Initial support is at 104.50 from another 50-point pivot, which targets 104.00 and 105.00.
Oscillators are declining.
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Mixed
LONG-TERM: Mixed
Sterling/dollar
Further proof of inflation vaulted sterling/dollar to a 3 ½-month high on Tuesday and my model remains long. It surrendered some of the gains, so cable should first edge lower.
Immediate support is now seen at 2.0035. The next level is 1.9950. Below 1.9905, support is now seen at 1.9850.
Initial resistance now comes at 2.0085. This is followed by 2.0005. The next level is 2.0155. Distant resistance is at 2.0250.
Oscillators are rising.
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Bullish
LONG-TERM: Mixed
Dollar/Swiss franc
Dollar/Swiss collapsed to a near three-month low and broke the trendline rising since March 17. My model remains short, but the pair reduced losses and the upside should be probed first. For the medium term, the close below 1.0113 signals a more sustainable decline.
Immediate resistance remains at 1.0135. Above 1.0195, resistance now comes at 1.0245. This is followed by 1.0320.
Initial support is at 1.0070. Below 1.0013, support is now seen at .9984 and .9890.
Oscillators are declining.
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Slightly bearish
LONG-TERM: Mixed
