Daily Forex Market Commentary

The dollar rallied on Wednesday as well versus all majors but cable, in part because of a better than expected durable goods orders report. But the crude oil made an aggressive recovery. The US currency should only consolidate today.

Euro/dollar

The euro/dollar sank to an over one-week low on Wednesday and my model remains short. Only a break below 1.5600 signals more weakness; if not, the medium-term upmove should resume.

Key support is at 1.5600. A close below this level would signal a sustained decline and the next level would become 1.5550. This is followed by 1.5460.

Initial resistance is now seen at 1.5690. The next levels are 1.5740 and 1.5811. Above 1.5865, euro/dollar has distant resistance at 1.6020.

Oscillators are mixed.

NEAR-TERM: Mixed to slightly bearish
MEDIUM-TERM: Mixed to slightly bullish
LONG-TERM: Bullish

Dollar/yen

Dollar/yen rallied broke out of an inside range on Wednesday on its way to a two-week high. My model remains long. Expect another attempt on the upside today, only that this looks tough to break now.

Immediate resistance is now at 105.30. Above 105.70, there is further strong resistance at 106.35.

Below 104.50 from a 50-point pivot, which targets 104.00 and 105.00, distant support follows at 103.40 from a 50-point pivot, which targets 102.90 and 103.90.

Oscillators are rising.

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

Sterling/dollar

Sterling/dollar reversed early losses to close higher on Wednesday, but remained in an inside range. My model remains long, but the immediate outlook is mixed.

Initial resistance remains at 1.9850. Above it, there is further resistance at 1.9910. Distant resistance is at 2.0030.

Immediate support is at 1.9760. This is followed by 1.9645. Only a break below 1.9545 would jeopardize the cable's recovery.

Oscillators are mixed.

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

Dollar/Swiss franc

Dollar/Swiss reversed early losses in a dramatic fashion to close higher on Wednesday, and my model went long. But it moved up too much too fast, and the immediate outlook is mixed to slightly bullish.

Initial resistance now comes at 1.0425. If this level is surpassed, then expect a test of 1.0510. Distant resistance is perched at 1.0623.

Immediate support is still seen at 1.0305. This is followed by 1.0200, 1.0130 and 1.0105.

Oscillators are rising.

NEAR-TERM: Mixed to slightly bullish
MEDIUM-TERM: Slightly bullish
LONG-TERM: Bearish

Cornelius Luca
Global Forex Trading
http://www.gftforex.com

DISCLAIMER: This forum and the information provided here should not be relied on as a substitute for extensive independent research before making your investment decisions. Global Forex Trading is merely providing this column for your general information. The views of the author are not necessarily those of Global Forex Trading, its owners, officers, agents or employees. In addition, any projections or views of the market provided by the author may not prove to be accurate. Global Forex Trading and Cornelius Luca will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this column. Global Forex Trading and Cornelius Luca do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.

FOREX : Foreign Exchange Market

FOREX is a word play on the term Foreign Exchange Market. It is a market for buying and selling of currencies from all over the world. Certainly, such transactions are bound to be voluminous. It is just an estimate that there are about transactions of $1.5 trillion USD on a daily basis in the FOREX. Now just compare this with the paltry $300 billion USD a day transactions for the US Treasury Bond and the $100 billion a day transactions for the US Stock Exchange.

The FOREX came into existence in 1971 when the fixed currency exchanges were abolished. Currencies no longer had fixed values after that; on the contrary, their rates (mostly taken in comparison with the USD) were fluctuating, and changed on a daily basis. Throughout the seventies and the eighties the FOREX grew steadily, showing more advancement in the later years. The market has stupendously grown from $70 billion USD a day to the staggering amount that it transacts today on a daily basis.

There are actually about five thousand trading institutions in the FOREX. These include international banks, central government banks such as the US Federal Reserve, and commercial companies and brokers for all types of foreign currency exchange. The best thing that shows the unbiased nature of the FOREX market is that it has no fixed headquarters anywhere – it operates primarily from all major cities like New York, Tokyo, London, Hong Kong, Singapore, Paris, Frankfurt, etc. One can even use the telephone or the internet to make the transactions. The major businesses at the FOREX are the buying and selling of products in other countries. Several transactions are also conducted from the currency brokers or traders who stand to make small profits with the daily fluctuations in the market.

Most of the FOREX business is centered on big banks and financial institutions, but it doesn’t mean that the FOREX is inaccessible to small investors. The recent changes in the financial regulations have effectuated this accessibility. Earlier, a minimum transaction size was required to conduct business with the FOREX. But the current rules have made it possible to break large inter-bank units into smaller bits. Each bit is worth as less as $100,000. This makes it possible to each individual investor through loans that are extended for trading, known as leverage. The ratio to control the lots is 100:1. This means, every $1000 USD will allow one to control $100,000 on the FOREX.

The benefits of trading with the FOREX are mentioned below:-

(1) Liquidity of Investments – As the FOREX is a huge market, the funds have a very high degree of liquidity. This is because of the presence of the international banks who provide their bids and carry out a large number of transactions on a daily basis. Therefore, there is always a buyer or seller for any type of currency.

(2) Highest Degree of Accessibility – The FOREX is open 24 hours a day for 5 days a week. Every Monday morning the exchange opens at Australian Standard Time and closes on Friday afternoon at New York time. Greater accessibility is provided because the transactions can be conducted from the person’s home or office.

(3) Open Market – At the FOREX, there are no secrets. All the fluctuations that occur in the market are made accessible to everyone at the same time. There is no insider trading in the FOREX.

(4) No Commission – There is no hassle of paying commission to the brokers in the FOREX. Here the brokers earn by setting up a difference between the buying price and the selling price of a currency, which is known as a spread.

It must be understood by now that for the FOREX to work effectively, the currencies must always be traded in pairs. For instance, the Japanese yen must be traded against the euro. When one kind of currency is sold, there should be another to be bought in its stead.

The profit happens because there is always mobility between the different currencies. Even if there is a miniscule change in the exchange rate, then it could mean substantial changes in the profits due to the large amount of money involved in the transactions. People are thronging to the FOREX and not any other institution due to the trust that they have in it. To add to the advantage, the market is absolutely well-advanced and uses sophisticated software for dealing out its transactions.

FOREX-DD : Forex Daily Analysis