The proximity of Labor Day weekend surely doesn't make things easier in the currency markets. Nor did the half-baked measures at Fannie Mae. The dollar closed slightly lower against the euro and franc on Wednesday, but basically flat versus the pound and yen. However, trading was quite volatile. The dollar lacks much direction, so expect more choppy trading for a couple of days. Only the German unemployment rate report is of interest, as the Nationswide housing price report should be negative.

Euro/dollar
The euro/dollar corrected into an inside range on Wednesday after falling to a near 6 ?-month low a day earlier. Again, following an early recovery, the pair should resume its decline. My model reversed its short position. Sideways to lower trading is likely.

Initial resistance is now seen at 1.4780. The next good level is at 1.4800. A pivotal level is in place at 1.4910.

Immediate support comes at 1.4710. The next levels are 1.4665 and 1.4572. Below 1.4540, support comes at 1.4485 and 1.4455.

Oscillators are mixed.

NEAR-TERM: Mixed with downside risk
MEDIUM-TERM: Bearish
LONG-TERM: Mixed

Dollar/yen
Dollar/yen had an outside day ahead of month end, but closed virtually unchanged on Wednesday. Unless the 110.00 area gives way, the pair will retest the 108.65 area. My model is (barely) short.

Immediate resistance is still in place at 110.00. Strong resistance follows at 110.35 from a 50-point pivot, which targets 109.85 and 110.85. Distant resistance is 111.60 from another 50-point pivot, which targets 112.10 and 111.10.

Strong support remains at 109.15 from a 50-point pivot, which targets 109.65 and 108.65.

Oscillators are mixed.

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

Sterling/dollar
Sterling/dollar sank to a new over two-year low on Wednesday and the selling pressure should continue.

Initial support is at 1.8286. This is followed by 1.8245. Below 1.8207, cable has support at 1.8127.

Immediate resistance now comes at 1.8437. This is followed by 1.8565. The next strong resistance remains 1.8620.

Oscillators are falling.

NEAR-TERM: Mixed with downside risk
MEDIUM-TERM: Bearish
LONG-TERM: Mixed

Dollar/Swiss franc
Dollar/Swiss closed marginally lower after alternating up and down days for eight days. The medium-term outlook remains positive, but trading should remain choppy for a couple of days.

Initial resistance is at 1.1025. The next levels come at 1.1054 and 1.1086. Strong resistance follows at 1.1185.

The pair still sees immediate support at 1.0955. This is followed by the area between 1.0925 and 1.0915. A pivot low remains at 1.0844, but this should not be challenged.

Oscillators are rising.

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