Friday February 25, 2005 - 20:00:06 GMT
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Dollar down after GDP report
The dollar lost ground against its G-7 counterparts mostly due to a GDP reading that checked in as expected and kept key technical levels in EUR/USD and AUD/USD in tact. In a wicked move back up, EUR/USD roared from 1.3160 to 1.3238 while AUD/USD raced from .7805 to .7885. Meanwhile, GBP/USD leapt from 1.9080 to 1.9190 but USD/JPY stayed in a confined 105.06 to 105.45 range. Many technical and momentum trading models were keeping a close eye on the key 1.3120 and .7790 levels because if they were breached an onslaught of USD buy signals would have kicked in. So now the market will wait for the ISM and Non Farm Payrolls and see what they have in store. A weak batch of US data especially from the Payroll Report will likely send the USD to new all time lows.
A break of 1.3120 in EUR/USD would annul the medium term upside potential. However, there are very solid supports at 1.3160 and 1.3135 and a break above 1.3310 could permit for a move towards 1.3650. We see resistance at 1.3270.
GAIN AN EDGE
We will try to buy EUR/USD at 1.3165-50 with a 1.3110 stop and 1.3300 objective.
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