Tuesday January 4, 2005 - 19:58:15 GMT
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Dollar Follow Through
The dollar staged an impressive rally against all of its G-7 counterparts as rumors that a report was about to surface from a well known think-tank stating a shift in the US Administration’s dollar policy. EUR/USD dropped from 1.3475 to 1.3277 while USD/JPY rocketed from 102.55 to 104.43. Meanwhile, USD/CHF leapt from 1.1435 to 1.1685 and GBP/USD collapsed from 1.9090 to an astonishing 1.8803. In addition, both commodity pairs (AUD/USD .7798 to .7644, USD/CAD 1.2044 to 1.2260) posted huge dollar gains. From all accounts, the dollar soared against every currency. But was today’s stunning rally just a by product of a “buy the rumor, sell the fact” scenario? For all intents and purposes, that alleged “report” was never released so on the surface it looks like the answer to the aforementioned question is a “Yes”. However, from a technical perspective, key breaks at 1.3440, 1.8980, and 103.05 likely caused a pile on effect from the black box trading community. We look for additional USD gains with 1.3235, 1.8720, and 105.50 all serving as key retracement levels.
TECHNCIALLY SPEAKING Key old support at 104.50 has capped USD/JPY in the intraday. A move through here and through 104.75 could unleash an assault on the key 105.25 high. Support checks in at 103.65 and 103.10.
GAIN AN EDGE We will sell USD/JPY at 105.15 with a 105.50 stop and 103.75 limit.
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