Friday January 21, 2005 - 19:45:48 GMT
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Forex: Dollar Washout
We saw the release of the University of Michigan Consumer Confidence preliminary reading for January this morning. The number came in worse than expected at 95.8 vs. expectations of 97.5. The move in the greenback was initially muted as EUR/USD, which was already trading with a bid tone, popped over the 1.3000 figure. USD/JPY, which was already off its highs (103.92) slid further on the news to 103.30. The real dollar decimation move came later as traders talked up a story in a popular weekly business publication regarding how Greenspan is content with the “measured” pace language and is not overly concerned with inflationary pressures. We have seen additional Fed speakers tow a similar line since the release of the Dec. 14th minutes. Eurodollar interest rate futures where bid off the gossip and created a EUR/USD buying spree. EUR/USD exploded on the news firstly taking out the 1.3005 resistance area, and then running through some large offers up at the 1.3020 area before printing the day high of 1.3066. It has since backed off but is still bid and is holding the 1.3050 area. The next key level looks to be 1.3117. USD/JPY was hammered as the 103 figure gave way and stops were taken out on the way to the low print of 102.61. EUR/JPY was also lower as it attempted to take out the 135.00 figure overnight but failed and reversed. We saw the pair briefly trade under the 134.00 figure but quickly rebounded and has been drifting between 134.00 and 134.20 on the upside. There are reportedly large options a full big figure lower.
Technically Speaking: The 1.5500 figure area has been upside resistance in EUR/CHF over the last month and there has not been decisive penetration of it.
GAIN an Edge: We look to fade any additional EUR/CHF strength. We will offer half our position before the figure at 1.5496 and the other half up at 1.5515. If done, we will leave a 1.5526 stop and look to take profit at 1.5402.
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