Wednesday July 20, 2005 - 10:00:08 GMT
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GBP dumps as BoE is expected to cut rates soon
Good morning everyone from FXstreet.com. Crude Oil gained some momentum yesterday but overall bias (technical point of view) is still bearish short-term.
Forex Technicals at a glance
The yo-yo market is back! Well, it looked as a pretty one-way trading but you can never underestimate the power of the euro bulls! The dollar substantially lacked momentum and the key area to watch (usd/chf 1.3050/75) proved to be a very strong resistance nad the dollar sold-off against the major europeans ....... but not against all of them. There was one exception: the british pound. Surprising? Not really ... It is now trading below 1.74 again (after briefly recovering it) after the BoE minutes release, which showed a very tight 5-4 vote to hold rates unchanged; presumably it will happen in August, and that has been used as the catalysator to sell it against all majors indeed. Eur/Gbp has very clearly broken the 0.6920 resistance level nad it has surged to above 0.6960, with some traders eyeing the 0.7 level as the next target for this upmove. Honestly speaking, I find difficult to get good risk/reward trades with the current volatility, and would stick to the opinion that CHF can gain momentum against the Euro (which obviously has not happened in previous sessions), a view that is really loosing ground as the pair has already tested the 1.5650 area, but hopefully failed to clear it, though it is pressing it quite strongly.
Trading Tips (youíll find more detailed info on them in the Trading Corner chat room):This still is a valid view -though pair is resilient to move and it has already touched the 1.5650 level, a clear break of which will certainly negate the view-: EUR/CHF presents a good risk/reward ratio for establishing long chf positions. If the uptrend channelís barriers prove to be valid magnets to the price action, initial target would be around 1.5520.
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