Wednesday January 19, 2005 - 19:46:07 GMT
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Forex: Delayed Reaction
The Dollar had little reaction over this morning’s economic data, but after Eur/Jpy put in a high in the London session of 1.3535/40 this pair fell back toward yesterday’s close of 1.3320. This pulled Euro and Dollar/Jpy down with it but not without a fight. Euro traded through stops at 1.3100/10 and stopped just sky of the 1.3122 (200hr moving average) before succumbing to the massive amounts of Eur/Jpy selling and fell to 1.2985/88 at mid-day N.Y. Dollar/Jpy after putting in a low of102.02/06 managed to remain firm and traded up to 102.60 without giving to much back. Then we saw comments about Germany stating there was unlikely to be a change in monetary policy for some time, which fits into what ECB President Trichet said last week that” we are just at our definition of price stability”. Added comments by another ECB official said “there is little chance of a Dollar correction while the U.S deficit persists. In between we flip flop in Euro and $/Jpy and trade tight ranges until the other shoe drops, which would be a change in policy for any of the G-7 counterparts or some real direction about how the administration will tackle the US budget deficit.
TECHNICALLY SPEAKING Euro has looked weak once it got through technical support of 1.3060/70. There was further support broken at 1.3010/20 on a 60 minute chart. The next support is 1.2975/80. There is resistance at 1.3120/30 to the topside. Euro is below all its 30 120 and 200 hr moving averages on the same 60 minute chart. The Relative strength has a reading of 35.80.
GAIN AN EDGE We look to by Euro at current levels and add at 1.2965 with a stop below 1.2940 and take profit at 1.3075.
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