Tuesday June 1, 2004 - 19:10:46 GMT
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Mixed Signals Spell Mis-Fortunes for the Dollar
The market has been whipped back and forth today as better than expected ISM data had the dollar flying before more oil concerns sent the dollar crashing once again. The ISM was released at 62.8 while the market expected a 61.5. The euro fell off its overnight highs of 1.2265 to a low of 1.2190 where there were expected market stops; but the euro has shown resilience and has traded back to 1.2250 in NY. The strong data in NY has done nothing to help the greenback over the past few session as the market has its eyes and ears open to what oil prices are doing and geo-political concerns also have helped the dollar slide. There was some talk among traders that with good data and the oil trading lower at the time in early NY we could see a nice dollar rally but it never materialized as oil spiked above the magical $40 again and the DOW slugged along in down territory as well. The euro seems entrenched firmly in an up trend now and we could see 1.2400 in the coming sessions. Stops are still in place to the downside in euro and nothing is in the way to stop the market from trading higher, it looks as though most traders would rather play from the long side of this market. The dollar did trade higher against the yen as we traded from an overnight low of 109.22 to a NY session high of 110.70, led by a eurjpy buying frenzy once we crossed 134.50.
Technically speaking: We look to buy the dips in euro until stopped out in this market. The slow stochastic is reading 56.44 and the RSI 54.21. There is still good resistance at 1.2265 but if that level is taken out we could see 1.2350.
Gain an Edge: We will buy dips to 1.2180 with a stop at 1.2150, our take profit is 1.2335.
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