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Daily Market Commentary

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The dollar made a mild recovery versus the European and the antipodean currencies on Tuesday

Wed, Sep 24 2008, 06:45 GMT
by Cornelius Luca

GFT

The dollar made a mild recovery versus the European and the antipodean currencies on Tuesday, along with a pullback in oil and gold, but this was only profit taking following an exceptionally volatile day on Monday. However, the bottom line is that the Treasury’s plan to remove banks’ toxic mortgage assets doesn’t look good and this increases the risk of a dollar decline going into the weekend. Keep an eye on Germany’s IFO reports, and to a lesser extent to the US existing homes sales. Following some early strength, the dollar should attempt to decline.

Euro/dollar

The euro/dollar fell on Tuesday on minor profit taking and gave back nearly half of its monster gains made a day earlier. My model remains long and the risk is on the upside. Initial resistance is at 1.4700. Above 1.4765, there is a pivot high at 1.4865. Further resistance is now seen at 1.4910 and 1.4960. Immediate support is at 1.4600. The next level is 1.4530. This is still followed by 1.4485.

Oscillators are rising.

NEAR-TERM: Mixed to slightly bullish
MEDIUM-TERM: Slightly bullish
LONG-TERM: Bearish

Dollar/yen

Dollar/yen consolidated on Tuesday in a tight range and closed virtually unchanged. It lacks much direction, but my model is short. Initial support remains at 105.10. The next level is 104.50 from a 50-point pivot, which targets 104.00 and 105.00. Distant support is 103.40 from another 50-point pivot, which targets 102.90 and 103.90. Immediate resistance is still seen at 105.60 from a 50-point pivot that targets 105.10 and 106.10. Further resistance looms at 106.75 from another 50-point pivot, which targets 106.25 and 107.25.

Oscillators are mixed.

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

Sterling/dollar

Sterling/dollar slipped on profit taking after surging a day earlier, and my model remains long. The upside remains favored in the short term, but only a break above 1.8639 would get the market excited now. Initial resistance is at 1.8550. The next levels are 1.8600 and 1.8639. Above these levels, the next resistance is now seen at 1.8722. Above 1.8800, distant resistance remains at 1.9115. Immediate support remains at 1.8475. The next level is 1.8355. Below 1.8250, distant support remains at 1.8110.

Oscillators are rising.

NEAR-TERM: Mixed to slightly bullish
MEDIUM-TERM: Slightly bullish
LONG-TERM: Bearish

Dollar/Swiss franc

Dollar/Swiss franc bounced slightly to recover nearly half of Monday’s sharp losses, but my model remains short. The initial bias remains bearish, but only a break below 1.0698 will suggest further weakness. Initial support is at 1.0825. The next level is 1.0780. Below 1.0698, support remains at 1.0535. This is followed by 1.0380. Initial resistance is at 1.0920. The next levels are 1.0983 and 1.1060. Distant resistance is at 1.1280.

Oscillators are bearish.

NEAR-TERM: Mixed to slightly bearish
MEDIUM-TERM: Mixed
LONG-TERM: Bullish

Published on  Wed, Sep 24 2008, 06:46 GMT