GFT Daily Market Commentary

The US stock markets are in a free fall, the commodities are crushing and the adversity to risk are taking the carry trades lower. Amid this unprecedented crisis, the major currencies continue to have a divergent behavior. The dollar should decline against the yen and advance versus the European currencies. The US trade should not matter and all eyes will be on the G7 meeting at the weekend.

Euro/dollar

The euro/dollar struggled higher on Thursday, as expected, but the upside is limited. In the medium term, the pair remains in a declining channel support. 

Immediate support is at 1.3500. The next level is 1.3443. Distant support looms at 1.3350.  

Resistance comes at 1.3620.  The next level is 1.3750. Above 1.3775, the euro/dollar retains resistance at 1.3857. Distant resistance follows at 1.3980.

Oscillators are mixed.

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

Dollar/yen

Dollar/yen collapsed to below to a new low for the downtrend and remains below the neckline of an irregular head-and-shoulders pattern. The downside is favored today.

Initial support comes at 98.25 from a 50-point pivot, which targets 97.75 and 98.75. Distant support follows at 97.30 from another 50-point pivot, which targets 96.80 and 97.80.

Immediate resistance is at 99.25 from another 50-point pivot, which targets 98.75 and 99.75. Distant resistance is at 100.25 from a 50-point pivot, which targets 99.75 and 100.75. 

Oscillators are bearish.

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

Sterling/dollar

Sterling/dollar fell to a new low for the downtrend. The outlook remains bearish.

Immediate support is seen at 1.6910.  The next support follows at 1.6705.

Initial resistance looms at 1.7070. The next level is 1.7270. Above 1.7395, distant resistance is at 1.7455.
 
Oscillators are bearish.

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

Dollar/Swiss franc

Dollar/Swiss franc consolidated into early Friday. Mixed trading is favored in the short term.

Immediate support remains at 1.1210. Below 1.1140, support is seen at 1.1085. Good support follows at 1.097.
 
Initial resistance is still seen at 1.1325. Above 1.1390, distant resistance comes at 1.1490

Oscillators are declining.

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

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The dollar continued its divergent behavior on Thursday, surging against the European currencies and declining versus the yen, as de-leveraging continued.  The euro suffered the brunt of the losses, after ECB President Trichet was a bit more dovish than expected and admitted that policy makers had discussed cutting interest rates.  Given the need for dollar funding, Friday should see the major currencies continuing their recent pattern. However, take your cues from the two key factors: the House vote on the TARP (not a sure dunk) and the nonfarm payrolls, and expect exceptional volatility.

Euro/dollar

The euro/dollar sank aggressively for the fourth consecutive day, dropping nearly 300 pips and reaching a four-month low. My model remains short.  Once again, I like holding short positions but remain uneasy opening fresh ones at these levels. The medium-term outlook remains negative.
 
Immediate support is at 1.3745. The next level is 1.3615. A distant support is in the 1.3495 area.
   
Above 1.3885, resistance is now seen at 1.3940. The next level is 1.4155. Distant resistance now pegged at 1.4275.

Oscillators are declining.

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

Dollar/yen

Dollar/yen reversed early gains and closed lower on Thursday. The slide was aggressive enough to turn my model short. Given the choppiness in this pair, I don’t trust this weakness much. Thus, the short-term outlook remains mixed.
 
Good support is now seen at 104.50 by a 50-point pivot, which targets 104.00 and 105.00.   

Immediate resistance is at 105.60 from a 50-point pivot, which targets 105.10 and 106.10. The next level remains at 106.75 from another 50-point pivot, which targets 106.25 and 107.25.

Oscillators are mixed.

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

Sterling/dollar

Sterling/dollar fell for a fourth straight day on Thursday, reaching a three-week low, and my model remains short.  Again, the downside remains only mildly favored, as the pair is heavily oversold. 
 
Initial support is now at 1.7550. Below a pivot low at 1.7448, distant support is at 1.7265.
 
Initial resistance is at 1.7710. Strong resistance remains at 1.7875. Above 1.7915, distant resistance is at 1.8085. 

Oscillators are falling.

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

Dollar/Swiss franc

Dollar/Swiss franc surged to the second high of the uptrend and my model remains long. The initial bias is bullish, but the pair remains overbought and some risk remains on the downside.  
 
Initial resistance now comes from a pivot high at 1.1417.  Above 1.1490, distant resistance is seen at 1.1580.
 
Immediate support is at 1.1290. Below 1.1190, support is now pegged at 1.1135. Distant support is at 1.1000.
 
Oscillators are rising.

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

The dollar stabilized after the House voted for the TARP and despite the horrible nonfarm payrolls. The credit markets remain frozen and the dollar is needed for funding out of Europe. The European horizon is darkening, so the euro should remain under pressure in the medium term. But the dollar is overbought in the short term, so a pause is due. The risk for the equities is on the downside.

Euro/dollar

Euro/dollar sank to a 14-month low.  My model remains short and the medium term outlook is bearish, but in the short term, a bounce is likely.
 
Immediate support is 1.3615. Below 1.3465, distant support is at 1.3350. 

Initial resistance is seen at 1.3705. This is followed by 1.3845.The next level is 1.3935. Above 1.3938, distant resistance is at 1.4200.

Oscillators are declining.

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

Dollar/yen

Dollar/yen encountered choppy trading, but closed flat on Friday. The short-term outlook remains bearish
 
Good support is seen at 104.10. This is followed by 103.54.   

Immediate resistance is at 104.50 by a 50-point pivot, which targets 104.00 and 105.00. The next level remains at 105.60 from a 50-point pivot, which targets 105.10 and 106.10.

Oscillators are mixed.

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

Sterling/dollar

Sterling/dollar reversed Thursday loses but my model remains short.  While the medium term outlook remains bearish, the pair is heavily oversold and a mild bounce is likely. 
 
Immediate support is at 1.7600. Below 1.7550, strong support now comes at 1.7448 from a pivot low.

Initial resistance is at 1.7840. Good resistance follows at 1.7950 from a Fibonacci retracement level. Above the strong level at 1.8060, distant resistance is at 1.8200. 
 
Oscillators are mixed.

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

Dollar/Swiss franc

Dollar/Swiss franc reversed Thursday’s gains, but my model remains long. The initial bias is bearish, as the pair remains overbought. The medium term outlook is bullish 
 
Initial resistance remains from a pivot high at 1.1412.  Above 1.1490, distant resistance is seen at 1.1580.
 
Immediate support is at 1.1290.  The next level is 1.1220. Below 1.1190, support is now pegged at 1.1135. Distant support is at 1.1000.
 
Oscillators are rising.

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

GFT Daily Market Commentary

The major currencies had a divergent behavior on Wednesday in the wake of unprecedented concerted rate cuts made by six major central banks led by the Fed. Sterling/yen fell sharply, while the euro was supported by good local data. The dollar should recover against the yen and decline versus the European currencies.

Euro/dollar

The euro/dollar confirmed a bullish reversal and should struggle higher today, despite the ECB rate cut. In the medium term, the pair remains near the bottom of a declining channel support. 

Resistance comes at 1.3750. Above 1.3775, the euro/dollar retains resistance at 1.3857. Distant resistance follows at 1.3980.

Immediate support is at 1.3620. The next level is 1.3443. Distant support looms at 1.3350.  

Oscillators are mixed.

NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bearish
LONG-TERM: Bearish

Dollar/yen

Dollar/yen collapsed to below parity on Wednesday, but recouped in early trading on Thursday. It remains below the neckline of an irregular head-and-shoulders pattern. The upside is favored today.

Immediate resistance is at 101.25 from a 50-point pivot, which targets 100.75 and 101.75. The next level comes at 102.30 from a 50-point pivot, which targets 101.80 and 102.80. 

Initial support comes from another 50-point pivot at 100.25, which targets 99.75 and 100.75. Distant support is at 99.25 from another 50-point pivot, which targets 98.75 and 99.75.

Oscillators are sliding.

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

Sterling/dollar

Sterling/dollar sank to a new low for the downtrend on Wednesday. The sell-off should run out of steam, as the BoE has already cut rates.

Immediate support is seen at 1.7173.  Below 1.7110, the next support follows at 1.7050.

Initial resistance looms at 1.7405. The next levels are 1.7500 and 1.7650. Above 1.7838, distant resistance is at 1.8000.
 
Oscillators are mixed.

NEAR-TERM: Mixed with upside risk
MEDIUM-TERM: Bearish
LONG-TERM: Bearish

Dollar/Swiss franc

Dollar/Swiss franc made a bearish reversal on Wednesday, as it hit a one-week low. The downside is favored in the short term.

Immediate support is at 1.1210. Below 1.1140, support is seen at 1.1085. Good support follows at 1.097.
 
Initial resistance is at 1.1325. Above 1.1390, distant resistance comes at 1.1490

Oscillators are declining.

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

GFT Daily Market Commentary

The dollar failed to make much of a bearish reversal after surging a day earlier against the European and the commodity currencies, and closed little changed overall.  All eyes remain on the battering of financial stocks, even though on Tuesday selling short was still off limits. The market is pricing in a UK rate cut on Thursday, but Federal Reserve Chairman Bernanke signaled readiness to lower interest rates soon, along with other measures (such as the Commercial Paper Facility Fund, designed to buy commercial paper) in order to alleviate the economic decline and thaw the credit freeze. Sideways trading should persist today, but the upside is favored for the dollar.

Euro/dollar

One day after branding a 14-month low, the euro/dollar made an early bullish reversal. But it failed to hold on to gains and closed well off its highs. My model remains short and the euro/dollar remains weak near the channel support. It remains oversold, but with the upside limited, its pressure should continue.

Immediate support is at 1.3480. The next level is 1.3443. Below 1.3350 there is support at 1.3260. Distant support looms at 1.3145.

Resistance remains at 1.3615. Above 1.3705, the euro/dollar has resistance at 1.3857. Distant resistance follows at 1.3980.

Oscillators are declining.

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

Dollar/yen

Dollar/yen failed to hold on to early gains and closed mixed on Tuesday. It remains below the neckline of an irregular head-and-shoulders pattern. Mixed, choppy trading is likely today. The immediate level to watch is 101.25 from a 50-point pivot, which targets 100.75 and 101.75.

Initial support is still seen at  101.75. The next level to watch low is the 50-point pivot at 100.25, which targets 99.75 and 100.75. Distant support is at 99.25 from another 50-point pivot, which targets 98.75 and 99.75.

Immediate resistance is at  101.75.  This is followed by 102.30 from a 50-point pivot, which targets 101.80 and 102.80. Above 103.40 from another 50-point pivot, which targets 102.90 and 103.90, distant resistance looms at 104.50 by a 50-point pivot, which targets 104.00 and 105.00.    

Oscillators are sliding.

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

Sterling/dollar

Weak industrial data sent the pound to a new 2 ½-year low on Tuesday before recovering losses. Following an early bounce, the sell-off should resume, as the BoE is expected to cut rates on Thursday.

Immediate support is 1.7445.  The next level is 1.7337.  Below 1.7250, the next big level is 1.7110.

Initial resistance is at 1.7545. The next level is 1.7650. Above 1.7838, distant resistance is at 1.8000.
 
Oscillators are bearish.

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

Dollar/Swiss franc

Dollar/Swiss franc nearly made a bearish reversal on Tuesday, but that wasn’t confirmed. Again, following a mild pull back, the upside should be retested.

Initial resistance is at 1.1500. Above 1.1590, distant resistance comes at 1.1875.

Immediate support is at 1.1395. Below it, support is seen at 1.1308. Good support follows at 1.1220.
 
Oscillators are rising.

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

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GFT Daily Market Commentary

The dollar stabilized after the House voted for the TARP and despite the horrible nonfarm payrolls. The credit markets remain frozen and the dollar is needed for funding out of Europe. The European horizon is darkening, so the euro should remain under pressure in the medium term. But the dollar is overbought in the short term, so a pause is due. The risk for the equities is on the downside.

Euro/dollar

Euro/dollar sank to a 14-month low.  My model remains short and the medium term outlook is bearish, but in the short term, a bounce is likely.
 
Immediate support is 1.3615. Below 1.3465, distant support is at 1.3350. 

Initial resistance is seen at 1.3705. This is followed by 1.3845.The next level is 1.3935. Above 1.3938, distant resistance is at 1.4200.

Oscillators are declining.

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

Dollar/yen

Dollar/yen encountered choppy trading, but closed flat on Friday. The short-term outlook remains bearish
 
Good support is seen at 104.10. This is followed by 103.54.   

Immediate resistance is at 104.50 by a 50-point pivot, which targets 104.00 and 105.00. The next level remains at 105.60 from a 50-point pivot, which targets 105.10 and 106.10.

Oscillators are mixed.

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

Sterling/dollar

Sterling/dollar reversed Thursday loses but my model remains short.  While the medium term outlook remains bearish, the pair is heavily oversold and a mild bounce is likely. 
 
Immediate support is at 1.7600. Below 1.7550, strong support now comes at 1.7448 from a pivot low.

Initial resistance is at 1.7840. Good resistance follows at 1.7950 from a Fibonacci retracement level. Above the strong level at 1.8060, distant resistance is at 1.8200. 
 
Oscillators are mixed.

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

Dollar/Swiss franc

Dollar/Swiss franc reversed Thursday’s gains, but my model remains long. The initial bias is bearish, as the pair remains overbought. The medium term outlook is bullish 
 
Initial resistance remains from a pivot high at 1.1412.  Above 1.1490, distant resistance is seen at 1.1580.
 
Immediate support is at 1.1290.  The next level is 1.1220. Below 1.1190, support is now pegged at 1.1135. Distant support is at 1.1000.
 
Oscillators are rising.

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

GFT Daily Market Commentary

Massive liquidation (or capitulation, if you prefer) of carry trades torpedoed AUD/JPY and NZD/JPY, while the structural inability of the Eurozone to put together a euro-TARP gave the green light to vicious sales of euros. Granted, Germany, France and Italy joined Ireland in guaranteeing all depositors, but that’s not what the market wanted to listen to. The dollar surged against the European and the commodity currencies, while sinking versus the yen. This move was severely overdone, and we should see the opposite first.     

Euro/dollar

The euro/dollar sank to a 14-month low in aggressive trading and probed the channel support before making a mild bounce. It’s severely oversold, but the upside looks limited – unless the US stocks soar.

Immediate support is at 1.3443. Below 1.3350 there is support at 1.3260. Distant support looms at 1.3145.

Resistance comes at 1.3615. Above 1.3705, the euro/dollar has resistance at 1.3857. Distant resistance follows at 1.3980.

Oscillators are declining.

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

Dollar/yen

Dollar/yen fell prey to significant cross sales and plunged to an over six-month low and nearly touched parity before bouncing. It also triggered an irregular head-and-shoulders pattern, but I have to take that with a grain of salt because the sub-parity target is too exotic.

Initial support is seen at 101.25 from a 50-point pivot, which targets 100.75 and 101.75. The low on Monday was defined by another 50-point pivot at 100.25, which targets 99.75 and 100.75. Distant support is at 99.25 from another 50-point pivot, which targets 98.75 and 99.75.

Immediate resistance is at 102.30 from a 50-point pivot, which targets 101.80 and 102.80. Above 103.40 from another 50-point pivot, which targets 102.90 and 103.90, distant resistance looms at 104.50 by a 50-point pivot, which targets 104.00 and 105.00.    

Oscillators are sliding.

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

Sterling/dollar

Cable slumped to a 2 ½-year low on Monday before trimming losses. Following an early bounce, the sell-off should continue.

Immediate support is at 1.7337.  Below 1.7250, the next big level is 1.7110.

Initial resistance looms at 1.7500. The next level is 1.7650. Above 1.7838, distant resistance is at 1.8000.
 
Oscillators are bearish.

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

Dollar/Swiss franc

Dollar/Swiss franc rallied to a new high for the uptrend but held below the channel line. Following a mild pull back, the upside should be revisited.

Initial resistance is at 1.1500. Above 1.1590, distant resistance comes at 1.1875.

Immediate support is at 1.1435. Below 1.1395, support is seen at 1.1308. Good support follows at 1.1220.
 
Oscillators are rising.

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