Monday February 7, 2005 - 20:15:47 GMT
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Dollar continues rally
The dollar continued to soar in spite of no real changes to the G-7’s rhetoric. In a one way fashion, EUR/USD dropped from 1.2860 to 1.2733 while USD/JPY soared from 104.35 to 105.05. Meanwhile, USD/CHF broke through key technical resistance at 1.2150 en route to a 1.2265 high and GBP/USD tumbled through the stop loss laden 1.8630 level to 1.8540 low. Most traders are still looking for fundamental clues as to why the USD has rallied so far so fast in 2005 but have had a hard time finding the answers. In general, the market’s “super bearish” sentiment towards the greenback has dissipated and with that real money accounts have slowly but surely begun to unwind short USD positions put on last year. And now, the momentum types and intra day trading community have shifted their focus towards buying USD dips as compared to selling USD rallies. We look for more of the same in the days ahead with 1.2710 and 105.50 providing stiff obstacles to the USD rally.
We see Fibonacci support at 1.2713. This is the 50% retracement of the 1.1763 to 1.3666 move. The big support, however, to the downside resides at 1.2475 (breakout level). On the topside, old supports at 1.2860 and 1.2925 offer stiff resistance.
GAIN AN EDGE
We will sell EUR/USD rallies to 1.2850 with a 1.2880 stop and 1.2660 objective.
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