Daily Market Commentary

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The dollar spiked wildly both ways

Thu, Jun 26 2008, 06:16 GMT
by Cornelius Luca

GFT (Global Forex Trading)


Additional evidence that the US economy is in trouble, this time from the volatile durable goods orders and the new homes sales, did not affect the dollar. But the FOMC meeting did; the combination of worries about inflation but no rate hike proved to be a hot mix for volatility, which exploded for a few minutes. The dollar spiked wildly both ways, and when the dust settled, the US currency was lower. The selling pressure should continue today.


Euro/dollar

The euro/dollar reversed losses and surged to a 16-day high after the Fed announcement, which was 5 minutes too early and surprised the market even move. My model remains long and the upside is favored. Strong resistance is at 1.5727. Above 1.5750, euro/dollar has additional resistance at 1.5840 and 1.5865. Initial support comes at 1.5635. The next levels are seen at 1.5565 and 1.5510. Below 1.5470, the next levels remain at 1.5430,1.5380 and 1.5305.

Oscillators are rising.

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


Dollar/yen

Dollar/yen yanked a one-week high on Wednesday, but when the dust settled, it remained around the 107.95 50-point pivot, which targets 107.45 and 108.45. My model remains short, but sideways trading should continue while the yen remains the neutral ingredient of long EUR/JPY and AUD/JPY crosses. Initial support is still seen at 107.45. Strong support is at 106.75 from another 50-point pivot, which targets 106.25 and 107.25. Distant support is at 105.60. Above 108.45, further resistance remains pegged at 109.15 from a 50-point pivot, which targets 109.65 and 108.65.

Oscillators are mixed.

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


Sterling/dollar

Sterling/dollar reversed early losses in an impressive fashion but basically remained stuck in an inside range. Trading on Thursday has an upside bias. Initial resistance now comes at 1.9770. Above 1.9800, further resistance comes at 1.9890 and 1.9940. Immediate support is now seen at 1.9715. The next level is 1.9650. Below 1.9605, distant support is at 1.9560.

Oscillators are rising.

NEAR-TERM: Mixed with upside bias
MEDIUM-TERM: Mixed
LONG-TERM: Mixed


Dollar/Swiss franc

Dollar/Swiss finally ended its silly pattern of alternating up and down days, as its early gains on Wednesday were reversed dramatically by the Fed announcement. Bearish bias is favored. Below 1.0336, further support comes at 1.0290. The next level is in the 1.0200 area. Initial resistance is in place at 1.0385. The next levels are 1.0440 and 1.0490. Above 1.0540, distant resistance is at 1.0622.

Oscillators are declining.

NEAR-TERM: Mixed with downside bias
MEDIUM-TERM: Mixed
LONG-TERM: Bullish

Published on  Thu, Jun 26 2008, 06:20 GMT

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