Tuesday May 18, 2004 - 17:53:15 GMT
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Range trading sets in during NY session
The market was in a range mode for most of the day as we stayed 1.1985-1.1945 in euro and the dollar stayed bid for most of the day at 1.2805-1.2850. The euro still looks to be trading soft at the moment as the crosses weighed heavily today in EURCHF, EURGBP and EURJPY. The days started with Housing Starts coming out a little worse than expected at 1969, compared to the 1985 expected number. This had the dollar initially trade a touch lower but the greenback seemed to take the news in stride and we slowly traded to a 1.2850 high on the day. The euro was affected all day by cross play and we saw a low of 1.1945 just ahead of suspected stops at below 1.1940. There was some FED statements released early this morning as well with Broaddus stating there is no sign of inflation risk in the bond market, yet the curve is as steep as it can possibly get right now. He also stated he is dusting of his old inflation Hawk Feathers. The news out of the euro zone continues to disappoint and that is why even with all the geo-political concerns and the price in oil going up the market still favors being long the greenback. The euro continues to stall even though it looks like it is ready for a breakout. The dollar on the other hand continues to find bids on the slips to the downside and we manage to fight back continuously. The AUDUSD also continues to struggle in this market as even though there is geo-political concerns out there which always seems to favor buying the AUDUSD, now we see that part of the region struggling along as we head half way thru the year. The AUDUSD was the play for most of last year but as the yield curve continues to get tighter and with the talk of the US to raise rates the AUDUSD is suffering.
TECHNICALLY SPEAKING: The euro has not looked healthy all day and increasingly looks poised to head lower. The slow stochastic is reading 39.75 on the hourly and the RSI is 39.15.
GAIN AN EDGE: We look to sell euro on any bounces towards 1.2000 and our stop will be at 1.2040, we look to take profit on our short at 1.1855.
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