The dollar suffered a day of basic consolidation on Monday, slipping versus
the European currencies and reversing losses against the yen. The US indices
managed to recover as well, but it’s very early to say the correction is over.
Expect the dollar to ease further today against the European currencies.
Euro/dollar
The euro/dollar managed to recover from a new low for its recent decline and
the strength of its bounce threatens more gains today. The medium-term decline
should persist, but should resume later this week.
Resistance now looms 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 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: Bullish
MEDIUM-TERM: Bearish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen recovered from a 3 ½-month low after failing to penetrate the
long-term trendline support at 108.00. Expect a further attempt higher today –
but not too aggressive.
Above 119.20, resistance is seen at 119.65 from a 50-point pivot that targets
119.15 and 120.15.
Initial support is at 118.75. Strong support is at 118.25 from a 50-point
pivot that targets 117.75 and 118.75. Distant support looms at 115.50 from
another 50-point pivot, which targets 115.00 and 116.00.
Oscillators are falling.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Bullish
Sterling/dollar
The sterling/dollar managed to stabilize after collapsing on Friday and
probing lower still early Monday. It has already given up 38.2% of the leg of
the uptrend between June 8 and July 24. Cable is still above 2.0000, so short
positions look good in the medium term, but choppy summer trading should not be
forgotten. The initial bias is upward.
The resistance at 2.0205 obviously gave way, and the initial cal is at
2.0300. Resistance will then emerge at 2.0360 and the pound has not peaked.
Further resistance is at 2.0430.
Immediate support is at 2.0180. A break below this level would signal a
further slide to 2.0135. Distant support is at 2.0040.
Oscillators are declining.
NEAR-TERM: Bullish
MEDIUM-TERM: Bearish
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss franc extended its silly “pattern” of one day up and one day
down for nine days, and Tuesday should be a mildly up day. Sideways trading
should prevail overall.
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.
Immediate support is seen at 1.2000. Strong support follows at 1.1962. If
this pivotal low gives way, then the downtrend is rejuvenated and dollar/Swiss
should challenge 1.1835.
Oscillators are mixed.
NEAR-TERM: Mixed with upside bias
MEDIUM-TERM: Bearish
LONG-TERM: Bearish
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