Wednesday February 9, 2005 - 19:52:47 GMT
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Dollar in choppy range
The dollar traded in a choppy range as investors seem to be responding in an ultra sensitive fashion to US interest rate news. In a wicked fashion, EUR/USD dipped down to 1.2643 then back up to 1.2815 while USD/CHF ratcheted from 1.2235 to 1.2152. Meanwhile, USD/JPY tried desperately to break the key psychological 106 handle (105.99 the high) before retracing back to 105.67 and EUR/JPY plodded from 134.75 to 135.45. It appears as if the USD gets a boost anytime a Fed member hints towards higher interest rates which is somewhat confusing given the fact that many analyst had fully expect US rates to increase as much as 75 basis points this year. So as we head into tomorrow’s US Trade Figures, it looks like the market is split with regard to direction of the USD. Some traders expect real money accounts to initiate fresh USD shorts while others look for much talked about option barriers at 1.2650 and 106.00 to be shattered. By the looks of today’s ruthless price action, tomorrow’s trade could very well be as choppy and volatile.
We see solid support at 1.2730 and 1.2650. There is resistance at 1.2850 and 1.2925. Psychological factors remain at 1.2700 and 1.3000.
GAIN AN EGDE
We will buy EUR/USD at 1.2720 with a 1.2680 stop and 1.2910 limit.
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