Tuesday October 5, 2004 - 18:25:51 GMT
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DOLLAR REMAINS FIRM DESPITE WEAK US DATA
The Dollar remained strong against the Jpy but slid against Euro after the release of ISM services index that sank from an expected 59.5 to 56.7 in September. The Euro after putting in lows of 1.2265 overnight managed to grind higher on the back of Euro/Gbp buying. Dollar/Jpy shook off the bad data out of Washington and took out short term stops above 111.00/05 and ran into a pocket of liquidity111.30/35 just below Japanese sell orders that are supposed to be lingering at 111.50 for exporters. Record high oil prices have weighed heavily on Jpy in the New York trading session. Euro on the other hand ran into the same liquidity near 1.2320/30 where profit taking was seen by the same spec accounts that bought yesterday and overnight at 1.2255/65. Itís worth mentioning that after Aud/Usd that failed to break down yesterday with Euro maintained its strength and put in a high in the N.Y session of .7250/55. Tomorrow there is no U.S data out but traders are looking to Fridays Non Farm Payroll number at 8:30 EST to stir the currency markets up.
Dollar/Jpy is forming a pennant on a 60 minute chart between the 12pm/1pm low of 111.10 and the 11am/12pm high of 111.32. This formation usually tends to exit in the same direction it entered. The Relative Strength Index is a positive 57.89 reading. There is trend line support seen in the near term at 110.90/111.00 and resistance at 111.50.
GAIN AN EDGE
We look to buy Dollar/Jpy at current levels and add to the position at 110.80/90 with a stop below 110.50 and a take profit of 112.05
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