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The dollar fell sharply on Thursday amid weak US data
Fri, Aug 22 2008, 06:07 GMT
by Cornelius Luca
The dollar fell sharply on Thursday amid weak US data, surging oil prices, and increased speculation that the government will be forced to bail out Fannie Mae and Freddie Mac. The leading economic indicators fell 0.7% in July, while the Philly Fed Factory Index improved to -12.7 in August from –16.3 in July, but the last time it was positive was in November. There are no US economic reports, but watch out for the UK GDP report. The dollar has a bearish bias.
Euro/dollar
Euro/dollar rallied to a one-week high and my model reversed its short position since July 22. The immediate risk is higher. Above 1.4905, good resistance now comes at 1.4963 from a Fibonacci retracement level. This is followed by 1.5050. Initial support is now seen at 1.4830. Below 1.4785, further supports are seen at 1.4673 and 1.4600.
Oscillators are mixed.
NEAR-TERM: Mixed with upside risk
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Dollar/yen
Dollar/yen collapsed to an over two-week low and my model remains short. It formed a double bottom that targets the 106.70 area and the initial risk remains on the downside. Initial support is now seen at 107.95 from a 50-point pivot, which targets 107.45 and 108.45. Above 108.95, dollar/yen has strong resistance at 109.15 from a 50-point pivot, which targets 109.65 and 108.65.
Oscillators are declining.
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Bullish
LONG-TERM: Mixed
Sterling/dollar
The oversold sterling/dollar rallied to a one-week high on Thursday after forming several bullish reversal signals. My model went long. The immediate risk is on the upside, but watch out for the GDP report. Initial resistance now comes at 1.8850. Above 1.8900, distant resistance is pegged at 1.9123. Below the immediate support at 1.8730 there is support at 1.8606. A pivot low remains at 1.8514.
Oscillators are rising.
NEAR-TERM: Mixed with upside risk
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Dollar/Swiss franc
Dollar/Swiss franc faked it out for two days, but collapsed on Thursday to a one week-low and my model went short. The immediate risk is on the downside now. Initial support is now at 1.0798. The next strong level is at 1.0768. Below 1.0710, support is at 1.0685. Immediate resistance moved to 1.0885. Above 1.0915, resistance comes at 1.0960. Distant resistance is at 1.1040.
Oscillators are declining.
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Bullish
LONG-TERM: Mixed
Published on Fri, Aug 22 2008, 06:09 GMT
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