Wednesday January 12, 2005 - 19:46:06 GMT
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The dollar took a major step backwards against all of its G-7 counterparts as a much worse than expected US Trade Balance number sent the bulls running for cover. EUR/USD exploded from 1.3086 to 1.3290 while USD/JPY fell from 103.50 to 102.15. Also, GBP/USD screeched from 1.8693 to 1.8935 and USD/CAD knifed from 1.2205 to 1.1945. Surely, today’s sell off caught many a trader “off guard” especially considering that just last Friday the greenback seemed destined to test key levels at 1.2875 in EUR/USD and 108 in USD/JPY. But as is usually the case, too many positions were lumped in the same direction resulting in a nasty, one way market. We look for key levels at 1.3350 and 101.50 to provide short term USD relief. But from a medium term technical standpoint, it appears as if the dollar is back in the crosshairs.
TECHNICALLY SPEAKING Key support at 101.80 and 101.30 could quickly come into focus if the psychological 102.00 gives way. Perhaps, the highly psychological 100.00 may be in the cards if the BOJ stands aside. The topside shows resistance at 102.60 and 103.10.
GAIN AN EDGE We will buy USD/JPY at 101.35 with a 100.95 stop and 103.00 objective.
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