Thursday December 16, 2004 - 20:27:41 GMT
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Painful Day For Forex Market
It was a painful day in the currency markets as breaks back below the key 1.3330 and above 104.00 levels triggered some massive dollar stop loss buying orders. In a wild one, EUR/USD knifed from 1.3428 to 1.3205 while USD/JPY galloped from 103.45 to 104.98. Meanwhile, GBP/USD fell from 1.9550 to an astonishing low of 1.9260 and USD/CHF galloped from 1.1380 to 1.1622. Today’s better than expected Current Account Deficit certainly aided the greenback’s cause but keep in mind heavy sales of the EUR/JPY and EUR/GBP crosses may have erroneously led the market to think the dollar was poised for another beating. With the cross movements, USD/JPY and GBP/USD were likely extremely overextended and the ensuing correction began to take place when the various US data release (Current Account, Housing Starts, Philly Fed) supported the buck. As the year winds down, we look for more unpredictable, whippy market conditions.
TECHNICALLY SPEAKING We see key medium term technical supports at 1.3174 and 1.3141. 1.3100 will serve as a huge psychological barrier. There is now resistance at 1.3330, 1.3370, and 1.3440.
GAIN AN EDGE We will buy EUR/USD at 1.3175 with a 1.3129 stop and 1.3325 limit.
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