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Forex Market Commentary for September 5, 2008 by Cornelius Luca

GFT Daily Market Commentary

The dollar surged versus both the European and the commodity currencies, while collapsing against the yen in a wild reversal of long-term positions. With Eurozone's Juncker basically saying the euro remains overvalued, the euro crosses will sink further. Enjoy the ride, but remember two points: the non-farm payrolls could create havoc and the risk is for a bad number; the equity markets are sliding aggressively as the oil price decline will not be sufficient to help the US economy.  I have to repeat what I said in the previous report “But it’s a game of crosses, with the European currencies being sold against the yen. These should be the core trades.” Good luck!
 

Euro/dollar

The euro/dollar fell to a near 11-month low and closed well below the trendline support rising since October 2006.  My model remains short.  The pair should attempt extending its decline.

Immediate support is at 1.4219. Below 1.4085, further support is seen at 1.3935. Distant support is now seen at 1.3750. 
 
Initial resistance is at 1.4315. The next level is 1.4385. Above 1.4543, distant resistance is at 1.4625. 

Oscillators are declining.

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

Dollar/yen

Dollar/yen collapsed to a 1 ½-month low in late Thursday trading but then recovered some of the losses. My model remains short.  The selling pressure should last

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

 
Immediate resistance is at 107.45 from a Fibonacci retracement level. Good resistance is at 107.95 from a 50-point pivot, which targets 107.45 and 108.45.  Distant resistance is at 109.15 from a 50-point pivot, which targets 109.65 and 108.65. 

Oscillators are declining.

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

Sterling/dollar

Again, sterling/dollar remains in a free-fall and sank further to a fresh near 2 1/2-year low. There is little reason to expect the selling pressure to stop.

Below 1.7538, support comes at 1.7444 and 1.7420. Distant support is at 1.7050. 
 
Initial resistance is still seen at 1.7630.  The next level to consider is 1.7720. Above 1.7855, distant resistance is at 1.8100.  

Oscillators are falling.

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

Dollar/Swiss franc

Dollar/Swiss climbed to a new eight-month high and formed another possible bearish reversal pattern. Take profit only on a confirmation, as the medium-term outlook remains positive.  My model is long. Again, after some early profit taking, the upmove should resume.

Initial resistance comes at 1.1175. The next level is 1.1270.  Distant resistance looms at 1.1360.
 
Immediate support is pegged at 1.1055. This is followed by 1.1010, 1.0950 and 1.0890.  Distant support remains at 1.0725.

Oscillators are rising.

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