Thursday August 4, 2005 - 04:49:43 GMT
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Tricom Futures and Foreign Exchange -
Forex: Look, up in the sky - Is it a bird, is it a plane, no it's the Euro!!!
The dollar fell for a third straight day on Wednesday in broad-based selling ignited by the euro's breakout from a four-week trading range to reach its highest level in two months. The dollar also fell to a six-week low against the Swiss franc and a three-week trough against sterling as traders focused on technical levels.
Market talk that oil-rich countries, reaping record crude prices, have been diversifying their dollar-heavy reserves into euros, has also driven the greenback lower in recent days.
Investors await Friday's U.S. employment report for July, which could cause the Federal Reserve to pause in its tightening cycle. Analysts expect another month of solid job creation, with median estimates pointing to the addition of about 183,000 jobs.
Some analysts believe the euro might give back some of its recent gains as dealers adjust positions ahead of the data.
The EUR/USD strength, and USD weakness continued on in early trade today, however the push upto 1.2380 in the EUR was quickly met with sellers looking to book profits on longs from overnight ahead of tomorrow's US employment data. I think the 1.2340 level will cap any advances today as traders remain wary of establishing new longs ahead of tomorrow's key data. The downside will find initial support at 1.2310, with strong support at 1.2260.
Going forward, we need now to consider that the EUR's recovery is starting, and that the USD's recent strength is all but over. Failure by the greenback to rally on the back of a firm number tomorrow will be the last nail in the USD's coffin.
Just about the whole market is expecting the BOE to cut rates today, however the statement following the meeting will be closely watched for any hint that this is a one-off. Such news will see the Sterling come -off initially, but then rally strongly on the back of the EUR, and USD weakness.
Today’s Economic Releases:
UK: BOE rate announcement
EU: ECB Rate announcement
Today’s Top Trades
· Buy AUD/NZD around 1.1110-20
· Buy EUR/USD around 1.2280-60, with a stop below 1.2230
For more ideas send me an email, [email protected]
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