Forex Market Commentary for May 20, 2008 by Cornelius LucaGFT Daily Market Commentary

The dollar rallied unexpectedly hard on Monday to reverse all or most of the gains made a day earlier. My model went long dollars against some of the European currencies, but with the S&P returning all of their gains, the US currency should come under pressure today.

Euro/dollar

The euro/dollar fell from its highest level since May 1 but had trouble at 1.5500. Are we still facing an interim inversed head-and-shoulders? Hard to tell as yet, but the rising channel remains in place.

Initial resistance is at 1.5540. the next level remains 1.5600. Above 1.5645, euro/dollar has additional resistance at 1.5685.

Immediate support is now seen at 1.5450. The next level is d 1.5415. This is followed by 1.5287.
Oscillators are bullish.

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

Dollar/yen

Dollar/yen struggled higher on Monday, but got stuck in an inside range. My model remains short. The downside remains favored.

Initial support is at 104.00. Strong support follows at 103.40 from a 50-point pivot, which targets 102.90 and 103.90. The next big level is 102.30 from another 50-point pivot, which targets 101.80 and 102.80. Distant support is at 101.25 from a 50-point pivot, which targets 100.75 and 101.75.

Immediate resistance is at 104.50 from a 50-point pivot, which targets 104.00 and 105.00.
Oscillators are mixed.

NEAR-TERM: Slightly bearish
MEDIUM-TERM: Bullish
LONG-TERM: Bearish

Sterling/dollar

Sterling/dollar surrendered all of its gains made on Friday and this forced my model to go short. I don’t like this and I need convincing that the pound is so weak here.

Immediate support is now seen at 1.9440. This is followed by 1.9400 and 1.9363. Only a break below 1.9363 spells trouble for cable.
Initial resistance now moved to 1.9520. Above 1.9570, there is further resistance at 1.9633. This is followed by 1.9695.

Oscillators are mixed.

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

Dollar/Swiss franc

Dollar/Swiss reversed from a one-week low on Monday and my model went long. This unexpected bounce means that the pair is back to a trading range.

Initial resistance now comes at 1.0600. If 1.0622 gives way, expect a test of 1.0680. Distant resistance is at 1.0800.
Immediate support is now seen at 1.0475. This is followed by 1.0430. 1.0350 and 1.0300. Distant support is then pegged at 1.0255.

Oscillators are mixed.

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




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