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Daily Market Commentary

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The dollar surged briefly versus the European currencies after the strong US jobless data

Mon, Oct 8 2007, 03:30 GMT
by Cornelius Luca

GFT

The dollar surged briefly versus the European currencies after the release of the strong US jobless data. When the dust settled it gave back these gains - but not against the yen. The sell-off was overdone on Friday and today the dollar should consolidate.

Euro/dollar

Despite its aggressive recovery on Friday, the euro/dollar closed the week lower and probably formed a bearish reversal on a weekly basis. At least in the short term the pair, which remains overbought in the medium term, should head lower. The uptrend is in trouble here

Below 1.4035, euro/dollar has support at 1.3995. Only a break below 1.3965 would confirm that a peak is in place. '

A move above 1.4185 would negate the pullback. Above 1.4281, strong resistance is seen only at 1.4400.

Oscillators are mixed.

NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bullish

Dollar/yen

Dollar/yen rallied a seven-week high on Friday. With the world liking carry trades once again, the pair should trade sideways to higher.

Immediate resistance is seen at 117.35. Above 117.85 there is distant resistance at 118.25 from a 50-point pivot that targets 117.75 and 118.75.

Strong support is at 116.85 from another 50-point pivot that targets 116.35 and 117.35

Oscillators are rising

NEAR-TERM: Slightly bullish
MEDIUM-TERM: Slightly bullish
LONG-TERM: Mixed

Sterling/dollar

Sterling/dollar recovered aggressively on Friday and this means the uptrend remains in place

Sterling/dollar made little progress last week, even though it coined a 2 ½-month high. With three days down and two up, and the uptrend in trouble, more information is needed here.

Initial resistance is at 2.0470. Strong resistance comes at 2.0530. If this level gives way, look for a test of the pivotal high at 2.0654.

Immediate support is seen at 2.0315. Next level is at 2.0275.

Oscillators are rising.

NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bullish

Dollar/Swiss franc

Dollar/Swiss reversed its early gains and closed lower on Friday. The slide was overdone and the pair should now bounce back.

Initial resistance is at 1.1854. Above 1.1935, distant resistance is at 1.2005.

Immediate support is at 1.1740. Next level is at 1.1695. Below 1.1585, there is support at 1.1495.

Oscillators are mixed.

NEAR-TERM: Mixed
MEDIUM-TERM: Mixed
LONG-TERM: Bearish

Published on  Mon, Oct 8 2007, 03:29 GMT