Daily Forex Market Commentary

The euro/dollar aggressively reversed from a three-week low after ECB President Trichet signaled a possible rise in euro zone interest rates as early as July. The dollar rallied against the yen, but gave up gains versus the pound and franc. Careful today, as the non-farm payrolls are due. If the ADP is of any significance, the report should not be that weak.

Euro/dollar

The euro/dollar surged from a three-week low following Trichet's statement and tested the trendline of its channel declining since May 27. If the non-farm is strong, then the pair will go down; if not, the trendline resistance will be toast.

Initial resistance is at 1.5647. If it breaks, look for a rally to the distant resistance at 1.5755.

The pair has immediate support at 1.5540. The next level is 1.5495. Below 1.5415, further support is pegged at 1.5335.

Oscillators are divergent.

NEAR-TERM: Mixed with risk either way
MEDIUM-TERM: Mixed to slightly bearish
LONG-TERM: Bullish

Dollar/yen

Dollar/yen exploded to a 3 ½-month high from an inside range. Expect further strength only if 106.42 breaks.

Above this level, resistance is now seen at 106.85. Distant resistance follows at 107.90.

Initial support is now at 105.60 from a 50-point pivot that targets 105.10 and 106.10. 105.10. Distant support comes at 104.50 from a 50-point pivot, which targets 104.00 and 105.00.

Oscillators are rising.

NEAR-TERM: Mixed with risk either way
MEDIUM-TERM: Bullish
LONG-TERM: Bearish

Sterling/dollar

Sterling/dollar recovered from a 2 ½-week low to close little changed on Thursday. It looks like an intermediate bullish reversal, but with the US data pending, it can go either way today.

Immediate resistance is pegged at 1.9600. Above 1.9690 there is a distant ceiling at 1.9770.

Below 1.9515, support is at 1.9470. Distant support is now seen at 1.9365.

Oscillators are mixed.

NEAR-TERM: Mixed with risk either way
MEDIUM-TERM: Bearish
LONG-TERM: Mixed

Dollar/Swiss franc

Dollar/Swiss made the expected upmove only early in the day and then gave it all up. It's approaching the tip of a triangle and nervous directionless trading should continue.

Immediate support is now seen at 1.0315. Below it, distant support follows at 1.0215.

Initial resistance is seen at 1.0425. The next ceiling remains pegged at 1.0490. A break above 1.0533 would signal a spike up to 1.0622, but this is unlikely.

Oscillators are mixed.

NEAR-TERM: Mixed with risk either way
MEDIUM-TERM: Slightly bullish
LONG-TERM: Bearish

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

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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