Friday May 21, 2004 - 19:27:30 GMT
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Trading off Technicals
The lack of economic data today forced currencies to trade off technicals, but the lack of liquidity caused some jumpy moves all-round. The overnight failure in Euro to go screaming through the 1.2060/70 barrier brought it back to the 1.2020 level by the New York open, with some resistance ahead of the figure. After dancing around above that level, the Euro tried to test the 1.19 handle but found no serious sellers and bounced right back up to 1.2010. The yen comeback has been the big story of the week, advancing to a 2-week high against the dollar. Confidence poured back into Japan with a surge in the Nikkei, and the IMF said that the Japanese economy may grow at its fastest pace in 14 years.The G-7 meeting this weekend is unlikely to cause much turmoil in the currency markets, with the agenda being primarily related to the oil supply crisis. The focus of the meeting will be to push oil-producing nations to increase oil production to bring prices down from their all-time highs. Since Japan imports almost all its oil, this may fuel further yen gains next week.
Technically Speaking: Euro was unable to take out important resistance at 1.2080 and that could bode well for the dollar going into the weekend since we are still in the 1.2200-1.1760 range. The slow stochastic is reading 33.05, and the RSI is 56.06. The ADX is still above 35 which could mean we are still in a bull trend but if 1.1990 gets taken out we could see 1.1890 all over again.
Gain an Edge: We look to sell into any euro rally until 1.2135 our stop is at the old high of 1.2180 and our take profit will be 1.1840.
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