Monday October 25, 2004 - 20:06:21 GMT
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DOLLAR CONTINUES ITS SLIDE
After a rocky overnight session the USD opened the day lower and looked primed for a rally. USD/JPY opened the session 106.60/65 and traded in a very tight range (106.60-75) which is where it is currently trading. It looks as if the dollar may be a bit heavy here and another push lower could be likely. Word out of Japan is that the BoJ feels that this move is more “Dollar weakness” rather than “Yen strength” and that could pave the way to a 105 level in USD/JPY. The USD still seems doomed in the short term vs. its Asian counterparties as the constant talk of a Chinese Yuan reval. also lingers, which has seemed to spark Asian Central banks to sell USD against the Euro. EUR/USD opened up at 1.2785/90 and traded down to a low of 1.2765/70 before popping back to high of 1.2825/30 where it is currently trading. A daily close above 1.2750 could send strong signals to the market that this trend still has some legs to run a bit further, possibly testing the 1.2900 level. It seems like the dollar is stuck in this “Perfect Storm” although relief may be closer than expected with Wednesday’s Advanced GDP release. A stronger than expected growth number could show the market that the US economy is stronger than perceived and that the USD is strongly oversold.
TECHNICALLY SPEAKING Dollar/Jpy is below its 30, 55 and 200 hr moving averages on a 60 minute chart. There is trend line resistance at 106.80/90 on this same chart. There is also support in the near term at 106.00/20. The Relative Strength index has a negative reading of 45.13.
GAIN AN EDGE We look to sell Dollar/Jpy at current levels 106.70/80 and then sell again at 107.10/20 with a stop above 107.50 and a take profit of 106.20/30.
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