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In an effort to re-establish confidence in the US financial markets, the Federal Reserve on Friday answered the market’s calls and cut the discount rate by 50 basis points to 5.75%. The Fed funds rate remained at 5.25% but the short-lived shot of confidence worked on Friday; the stocks rallied and the crosses against the yen got a reprieve, Not sure that this continue even for the entire Monday though.
Euro/dollar
The euro/dollar, which was severely oversold in the short term, recovered on Friday, as expected. Following some more bounce today, the sell-off should continue.
Initial resistance is at 1.3550. Above 1.3625 there is resistance at 1.3700. This is followed by 1.3775.
Below 1.3410, support comes at 1.3358. Next level is at 1.3265.
Oscillators are declining.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Bullish
Dollar/yen
Dollar/yen recovered from a 14-month low of 111.61 made early Friday and a proprietary Gann level at 111.60 curbed this slide. The bounce on Friday erased just under a quarter of the losses made since July 10. Following a mild recovery the sell-off should resume as the pair remains under the trendline rising since January 2005, now at 116.00.
Initial support is at 114.00. Below 113.25, support is at 112.90 from a 50-point pivot that targets 113.40 and 112.40. Below the pivot at 112.00 there is support at 111.60 from a 50-point pivot, which targets 112.10 and 111.10.
Immediate resistance is at 114.20 from another 50-point pivot that targets 113.70 and 114.70. The next level is at 115.50 from another 50-point pivot, which targets 115.00 and 116.00.
Oscillators are declining.
NEAR-TERM: Bearish
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Sterling/dollar
Sterling/dollar closed unchanged after hitting a two-month low of 1.9653. The recent slide erased a quarter of the uptrend between November 2005 and July 24. The weakness is here to stay despite the bounce on Friday.
Immediate support is at 1.9750. A break below the pivotal level at 1.9653 would signal a further slide to 1.9550.
Initial resistance is at 1.9880. Strong resistance follows at 1.9937. It is very unlikely that the resistance at 2.0015 will gives way. More weakness remains in store, but an immediate bounce is likely.
Oscillators are declining.
NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss recovered from a one-week low but closed down on Friday. Following a brief recovery the medium-term selling pressure should resume.
Initial resistance is at 1.2140. Above 1.2219, the next resistance is at 1.2310.
Immediate support is at 1.1995. Below 1.1870, support is seen at 1.1819. Next levels are 1.1788 and 1.1740
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bearish
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