Tuesday January 18, 2005 - 20:03:47 GMT
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Dollar Digests Data
The dollar traded mixed as some short covering of EUR/JPY and GBP/JPY confused the market. EUR/USD rose from 1.2995 to 1.3075 (behind a higher EUR/JPY 133.30 to 134.40) only to retreat back to 1.3005 when US TIC data checked in at a much better than expected 80 billion. Meanwhile, GBP/USD rallied from 1.8525 to 1.8736 and GBP/JPY galloped from 189.90 to 192.25. A better than expected UK RICS and CPI contributed heavily to the poundís rise on the basis that UK rates may head up yet again. In other activity, EUR/CHF fell from 1.5480 to 1.5423 and USD/CAD jumped from 1.2185 to 1.2265. So as we head into mid week, many traders had expected the much ballyhooed option barriers at 1.2990 to 1.2925 to be put to the test. A potential triple bottom formation at 1.3000 may have put an end to that type of thinking. We look for 1.3090 and 1.8760 to provide us with further clue.
There is potential for a bottom building process in EUR/USD at the 1.3000-1.2990 level. Even under this level sits solid support at 1.2950-35. The topside shows congestion at 1.3075-90 and important resistance at 1.3250.
GAIN AN EGDE
We will buy EUR/USD at an average of 1.2975 with a 1.2920 stop and 1.3200 limit.
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