Wednesday March 23, 2005 - 13:03:23 GMT
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CMC Markets - www.cmcmarkets.com
USD remains bid after hawkish post-FOMC statement.
The dollar continues to gain ground after last yesterday’s comments by the FOMC left traders with little doubt that the current run of rate hikes would now continue through the second quarter of 2005. Furthermore, as we wind down towards the end of the short trading week, there’s not much in the way of economic news around that’s likely to stem the slide of either the Pound or the Euro pairs. Data released from the Bank of England has shown a trend towards the MPC wanting to hike rates with a 7-2 verdict being recorded, although this predates yesterday’s CPI number which came in marginally below expectations, underlining the current fragile state of the UK economy. In addition to this, the German IFO business confidence index has fallen to its lowest level in 18 months, adding further pressure to the common currency and suggesting that we may see a test of that psychologically important 1.30 level against the greenback, last seen in mid-february. Ahead of this we may see some support around 1.3050, whilst any appreciation on the topside is likely to meet with resistance around 1.3090-1.3100, 1.3140 then 1.3200-25. Sterling is now sitting well below the 1.90 mark and looking at the technicals, any continued correction could take us down to 1.87 or 1.85. Before this however, expect to find support at 1.8790-1.8800, with resistance at 1.9830-40 then 1.9015-25.
Written by Chris Callander
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