The post-Thanksgiving day saw, the European currencies and the yen making new highs early in the day and then giving up these gains to close unchanged. All eyes should be on the carry trades, as the appetite ford risk might have already started to increase. This means dollar/yen should recover and the European currencies should edge lower.

Euro/dollar

Euro/dollar rallied to a new record on Friday but ended the day unchanged. It should make only a pullback before the next move up.

Strong resistance is now seen at 1.4966. This is followed by 1.5000. Distant resistance is now pegged at 1.5130.

Initial support is at 1.4777. The next floor is at 1.4700. This is followed by 1.4635 and 1.4560.

Oscillators are rising.

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

Dollar/yen

Dollar/yen fell to a 2 -low but the decline is probably overdone. If the long liquidation of carry trades is pausing, the pair should recover a little.

Immediate resistance is at 108.60. Strong resistance follows at 109.15 from another 50-point pivot that targets 109.65 and 108.65. Above 109.65, distant resistance follows at 110.35 from a 50-point pivot that targets 109.85 and 110.85.

Strong support comes at 107.95 from another 50-point pivot; targets 107.45 and 108.45. This is followed by 106.90.

Oscillators are declining.

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

Sterling/dollar

Sterling/dollar had an outside day on Friday and choppy trading should continue today for this high-yielding currency.

Above 2.0764, resistance remains at 2.0795. Above it there is resistance at 2.0840. Distant resistance looms at 2.0980.

Immediate support is seen at 2.0590. Below 2.0520, the next floors are at 2.0455 and eventually at 2.0315.

Oscillators are rising.

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

Dollar/Swiss franc

Dollar/Swiss remains weak after sinking again on Friday to its lowest level since currencies were allowed to float freely. It is very oversold, but buy it only on a confirmation.

Below 1.0960, support is pegged at the pivotal low of 1.0892. Distant support follows at 1.0805.

Initial resistance is at 1.1100. This is followed by 1.1175 and 1.1285.

Oscillators are declining.

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

Monday, November 26, 2007 8:00 GMT

Daily Forex Market Commentary

By: Cornelius Luca, Currencies Analyst, GFT

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