Tuesday February 8, 2005 - 19:10:27 GMT
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GREENBACK CONTINUES TO GRIND HIGHER
USD short-covering was the dominant theme overnight and into the N.Y session. Headlines from the US budget proposal yesterday may have helped the USD as well on its upward trend both yesterday and overnight as Asian and European traders digested the rhetoric. As expected, the White House proposed tough cuts to a range of domestic programs and traders took this as Dollar positive and this was all that was needed to get momentum traders on board for the Dollar rally. Dollar/Jpy was met by buyers after putting in a top at 105.95/99 on every dip. Eur/Usd put in fresh lows overnight at 1.2730/35 and has traded on the bid side because of Eur/Jpy strength. Snow was quoted as saying “The U.S. contention that the current account deficit was being driven by U.S growth, exceeding that of its trading partners which required political action to remove barriers to growth overseas”. The market has had enough of the comments about the Yuan and it’s reval so these comments had little effect on the Dollar. Thursday will bring the Trade numbers and the market is geared for another let-down. If this number surprises (positive US) the Dollar could explode and 102.00 will be nothing more than a memory.
On a 60 minute chart Dollar/Jpy is trading above all its 30 120 and 200 hr moving averages. There is trend line support seen at 105.25/35 on the same 60 minute chart. On the topside there is resistance at 106.00/20. The Relative Strength Index is a 55.24 reading.
GAIN AN EDGE
We look to buy USD/JPY at 105.30 with a stop below 104.80 and a take profit of ˝ at 105.90 and ˝ at 106.25
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