A selection of comments from analysts on important technical developments in the foreign exchange market.
EURO/DOLLAR: "With the break through the near-term trend lines earlier this week, the euro opened the door for a short-term recovery move to finish May. However, we continue to find cautionary signals in the market and worry that the near-term recovery will serve as a consolidation phase of a broader correction.
As we enter June we do expect to see renewed interest in the US dollar and will carefully monitor key euro/dollar level at $1.18. Any move below $1.18 in June will clear the stage for a more significant decline in 2004.
DOLLAR/YEN: "Dollar/yen broke below initial trendline support this week at 111.25 yen and it is now retesting stronger support against the 40-day moving average at 110 yen. Momentum measures moved back toward oversold and we look to enter the first week of June we expect to see a new US dollar buying effort resurface against this rising moving average."
DOLLAR INDEX: "After dropping below technical trendline at 90 the US dollar index extended its weakness this week, rechallenging an important trendline support against 88.6. Momentum measures are back in oversold territory and we look for new US dollar buying to attempt to resurface in early June. We need to see the dollar index move back above 90.3 to return confidence in the broader recovery of the US dollar."
DOLLAR/YEN: "We have strongly articulated the view recently that having held major resistance dollar/yen could trade lower towards daily moving average support in the 109.00-109.50 yen area.
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