Friday February 4, 2005 - 20:26:17 GMT
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The dollar rallied in spite of a less than stellar US Non Farm Payroll Report as well as shoddy University of Michigan Consumer Sentiment. In a wild move, EUR/USD fell from a post Unemployment number high of 1.3050 to an astonishing 1.2868 low while GBP/USD knifed from 1.8925 to 1.8733. Also, USD/JPY held 103.50 and rose as high as 104.10 and USD/CAD finally pierced through the technically significant 1.2475 (up from 1.2390) only to stop just ahead of the key psychological 1.2510. Some traders attributed the greenback’s rise to Alan Greenspan’s “not so bearish” view of the US Trade Deficit while others felt it was more a story of getting short USD’s at the bottom and long at the top. With this weekend’s G-7 taking place as of this writing and most of the other event risks being taken out of the picture, its not at all out of the question to wonder if the USD may have peaked at these levels for the foreseeable future. After all, Mr. Greenspan didn’t’ speak about any new developments with regard to the USD or the Trade Deficit and this weekend’s G-7 is unlikely to spring any surprises. We look for 1.2850 and 1.2140 (USD/CHF) to offer excellent USD shorting opportunities.
We see solid support at 1.2850 in EUR/USD as well as the psychologically significant 1.2800. On top, 1.2920 (old support) marks the first area of key resistance with 1.3050 being more significant.
GAIN AN EDGE
We are long EUR/USD at 1.2870 with a 1.2839 stop and 1.2995 limit.
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