Thursday February 10, 2005 - 18:45:14 GMT
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The dollar lost it against all of its G-7 counterparts as traders came to grasp with the reality that although today’s Trade Deficit number was an improvement, it was still the 2nd worst ever to be recorded. After zipping back down to 1.2740, EUR/USD exploded to an eventual 1.2905 high while USD/CHF initially catapulted to 1.2245 before crashing to 1.2040. In other riveting action, USD/JPY pierce through the key 106 barrier region en route to a 106.89 high only to fall back in piano like fashion to 105.35. And to top it off, GBP/USD again tested the 1.8500 level (1.8517 the low) before it ravaged through the key technical 1.8655 level to a 1.8735 high. We had an idea that today’s price action might not be very friendly but today’s movements were breathtaking. When the smoke eventually cleared, traders leaned on 1.2910 and 105.30 to perhaps establish fresh USD longs. But don’t be mistaken, the USD bull trend of 2005 may have very well come to a resounding end.
The break of 1.2850 annuls the bearish EUR/USD pattern for the short term but the key upside level remains at 1.2920 (old support). Beyond that, 1.2975 and 1.3020 are next resistance candidates with 1.2820 and 1.2730 being strong supports.
GAIN AN EDGE
We will buy EUR/USD on a dip to 1.2850 with a 1.2800 stop and 1.2975 objective.
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