Daily Forex Market Commentary

The dollar fell further on Monday versus the euro and the pound, but rallied versus the yen and closed flat against the franc. The US currency should remain under pressure across the board this week, but some initial consolidation may be seen. Keep an eye on the UK and US retail sales reports.

Euro/dollar

Euro/dollar rallied on Monday and the upmove was spiffy enough to turn my model long for the first time since late April. A break above 1.5580 adds confidence to this bullish outlook.

Immediate support is now seen at 1.5487. Strong support then comes at 1.5415. Distant support follows 1.5287.

Initial resistance is at 1.5580. Above 1.5600, euro/dollar retains additional resistance at 1.5685.

Oscillators are bullish.

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

Dollar/yen

Dollar/yen rallied on Monday to erase all of the losses incurred a day earlier. My model remains (uncomfortably) short. There should be some residual demand, but the upside looks limited.

Immediate resistance is at 104.00. Next strong barrier remains at 104.50 from a 50-point pivot, which targets 104.00 and 105.00

Initial support is now at 103.40 from a 50-point pivot, which targets 102.90 and 103.90. This is followed by 102.30 from another 50-point pivot, which targets 101.80 and 102.80.

Oscillators are mixed.

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

Sterling/dollar

Record inflation in UK means that the BoE cannot really cut interest rates. Consequently, sterling/dollar was catapulted from a 2 ½-month low to close higher on Monday. My system remains short, and the short-term outlook is slightly bearish.

Immediate support is at 1.9495. Below it, support remains at 1.9410. This is followed by 1.9363. Distant support looms at 1.9185.

Initial resistance now comes at 1.9580. The next level is 1.9635. Above 1.9690, there is distant resistance at 1.9840.

Oscillators are mixed.

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

Dollar/Swiss franc

Dollar/Swiss consolidated in an inside range and closed little changed in Monday. My model remains short, but I expect more sideways trading.

Immediate support is still seen at 1.0350. This is followed by 1.0300. Support is then still pegged at 1.0255.

Initial resistance now comes at 1.0470. If this close level gives way, expect a test of 1.0515 and 1.0550.

Oscillators are mixed.

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

Cornelius Luca
Global Forex Trading
http://www.gftforex.com

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