Daily Forex Market Commentary

The dollar failed to cut new paths on Wednesday, despite aggressive and choppy trading, but gave us all a scare in overnight trading when it fell briefly below 118 yen. The worst of the equity market correction and of the subprime crisis seems to be behind us, so the market is consolidating and looking for new direction. We may have to wait until Friday, when the US non-farm payrolls report is due, before this direction becomes clear, but the bias for the dollar/Europe is on the downside.

Euro/dollar

The euro/dollar closed little changed on Wednesday after reversing early losses. The short-term outlook is bullish.

Resistance remains at 1.3732. Strong support follows at 1.3775. There is a pivotal high at 1.3853. Distant resistance is now pegged at 1.3935.

Initial support is still in place at 1.3665. Support follows at 1.3625 from the 38.2% Fibonacci retracement level of the June 13 – July 24 leg of the uptrend and then at 1.3605. Next level is at 1.3555.

Oscillators are mixed.

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

Dollar/yen

Dollar/yen fell late further early Wednesday and briefly broke the long-term trendline support at 108.00. Expect it to make another attempt higher today – but not too aggressive.

Immediate resistance is at 119.15. Strong, resistance is seen at 119.65 from a 50-point pivot that targets 119.15 and 120.15.

Below 118.60, support is still seen at 118.25 from a 50-point pivot that targets 117.75 and 118.75. Next key level is at 118.00. Distant support looms at 116.75.

Oscillators are mixed.

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

Sterling/dollar

The sterling/dollar reversed earl losses to make the expected upmove on Wednesday. The initial bias is still upward.

Initial resistance is at 2.0380. Further resistance is at 2.0430.

Immediate support is at 2.0285. A break below the 2.0245 level would signal a further slide to 2.0200. Only a break below this level would confirm that a peak is finally in place.

Oscillators are declining.

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

Dollar/Swiss franc

Dollar/Swiss franc reversed from a two-week low to close up on Wednesday. Sideways to lower trading is now likely.

Immediate support is seen at 1.2020. Strong support follows at 1.1962. If this pivotal low gives way, then the downtrend is rejuvenated and dollar/Swiss should challenge 1.1835.

Initial resistance is at 1.2065. Next cap remains at 1.2140. It would take a break above this level to increase the odds that a significant low is in place.

Oscillators are mixed.

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

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