Friday January 28, 2005 - 19:02:49 GMT
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Interesting ride overnight in the FX world saw PBOC’s Yu Yongdong comments send traders running for the hills. These comments sent USD/JPY at yesterdays close for a tailspin, trading below key support levels at 102.70 and 102.50 before running into good support by USD/JPY shorts looking to lighten up at 102.30/40. Only to have PBOC deny the comments and stated that these comments were his personal comments and not an official stance of the government. The violent market reaction to this type of news flow highlights the intense focus on Chinese FX policy in the run-up to the G7 meeting in London on Feb 4-5. The lack of follow-through thus far in USD/JPY, however, is worthy of note and ongoing attention. This sent USD/JPY right back up to 103.40. Since then the Dollar has gained ground and held on heading into the weekend. Euro on the other hand saw highs of 1.3070/75 overnight and took out stops to the downside below 1.3005 and 1.2990. Rounding out the month on Monday should be peaceful but heading into next weekend should see a lot of jockeying for position based on China being present and the fact that the G7 will address currencies.
After taking out key support in USD/JPY of 102.70 and 102.50 the last strong hold was 102.00/10 that held in. There is resistance seen at 103.75/85 and 104.25/35 in the near term. There is also good short term trend line support at 103.25/30. The Relative Strength index has a 56.84 reading.
GAIN AN EDGE
We look to buy USD/JPY at 103.25 and 102.95 for a move to 104.25/35 with a stop below 102.50.
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