Thursday June 10, 2004 - 20:33:04 GMT
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INTEREST RATE PLAY IS BACK
The moves today were caused mainly by the Bank of Englandís 25 basis point increase in interest rates. The initial knee-jerk reaction was to buy GBP and once they could not get stops above 1.8330 the market did a complete turn around and sank through 1.8250 and reached a daily low of 1.8185/95 before getting back on its feet and surging to highs after N.Y lunch 1.8440/50. Euro was dragged up in the same fashion trading from lows of 1.2030/40 to highs of 1.2110/20 before running into some profit taking and some talk of central bank selling. Dollar/Jpy fell from London highs of 110.20/30 down to 109.15/25 on the back of a Chinese official stating the economy will probably have a ``soft landing,'' easing concern that demand for Japanese exports will slow. Japans eight quarter expansion is being predicted to continue because China is the second biggest importer of Japanese products. The Dollar against the Jpy has mostly traded sideways over the past few weeks and traders are starting to talk about a Dollar slide with an interest rate hike already in the cards. With the funeral of former President Regan tomorrow the markets will take a breather and await more data next week
TECHNICALLY SPEAKING Euro/Dollar has breached the 1.2050/60 level after GBP pulled this pair with it on the move above 1.8250-60. Euro appears to be forming a pennant on the 60 minute chart between 1.2085 and 1.2120. We remain in a down trend for the time being, with resistance seen at 1.2130-50 and support at 1.2060/80. The RSI pushed through the 50 to sit at 55.98 on the same 60 minute chart.
GAIN AN EDGE We look to buy Euro on a dip back to 1.2070/80 with a stop below 1.2045 and a take profit of 1.2160.
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