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Daily Market Commentary

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The dollar made aggressively reversed early gains on Monday

Tue, Jul 8 2008, 06:29 GMT
by Cornelius Luca

GFT

The dollar made aggressively reversed early gains on Monday to reflect the plunge of Freddie Mac and Fannie Mae on NYSE on concern these two leading mortgage-finance companies may need to raise more capital; Lehman Brothers analysts had said Fannie Mae will add $46 billion of capital and Freddie Mac $29 billion. With the stocks confirming a bear market, the dollar should make another choppy decline – but the accent is on choppy!

Euro/dollar

Euro/dollar reversed from a 1 ½-week low and closed higher on Monday, but my model remains short short. The market remains below the former rising trendline and only a close above 1.5735 would now encourage further strength. Below 1.5674, support remains at 1.5605. The next good level is at 1.5685. Below 1.5630, further support remains at 1.5575. Immediate resistance is at 1.5735. Above 1.5820, euro/dollar faces key resistance at 1.5905.

Oscillators are mixed.

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

Dollar/yen

Dollar/yen slipped from a 1 ½-week high, but expect more choppy trading. Resistance remains at 107.25. Distant resistance remains at 107.95 from a 50-point pivot, which targets 107.45 and 108.45. Initial support is at 106.75 from a 50-point pivot, which targets 106.25 and 107.25. Further support remains at 105.60 from another 50-point pivot that targets 105.10 and 106.10.

Oscillators are rising.

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

Sterling/dollar

A week economic report hurt sterling/dollar on Monday, but the pair still managed to reduce losses. My model remains short and the close below 1.9785 encourage more weakness. But choppy remains the key word for trading FX. Below 1.9710, support is now seen at 1.9605. Distant support remains at 1.9540.

Oscillators are declining.

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

Dollar/Swiss franc

Dollar/Swiss fell from a 1 ½-week high, but made little progress on Monday, so expect further choppy trading. My model remains long. Above 1.0325, resistance remains at 1.0415 and 1.0450. Distant resistance comes at 1.0540. Initial support is still in place at 1.0215. Below 1.0166, support is seen at 1.0113, 1.0065 and .9996.

Oscillators are rising.

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

Published on  Tue, Jul 8 2008, 06:34 GMT