Friday June 18, 2004 - 18:41:46 GMT
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Dollar down the Tubes
As the week drew to a close today, the action died down after some initial moves following the morning number. Current Account Balance was reported worse than expected, at -144.9 vs. expected -141B. The reaction was a little delayed, but the Euro proceeded to slice through the 1.2100 figure, and finally settled at 1.2130. Against the yen, the dollar suffered the biggest blow, spilling to a 6 week low to 108.60. There is still the potential for long-term yen gains due to capital inflows and confidence over the economy. The week to come will probably display reserved trading before the big FOMC announcement at the end of the month, and the market firmly pricing in the 25 basis point hike. The GDP number could be the only one with enough power to shake that belief, so watch out for that one.
Technically Speaking: The euro made some impressive gains today on the back of some bad US news but, the cross in eurchf may actually help the dollar in the coming days. The cross is bottoming at 1.5060 and we could see a bounce lead to some dollar buying as well. The euro looks to be topping out in front of 1.2140 and there is good resistance at 1.2170. The slow stochastic is reading 90.22 and the RSI is at a modest 71.20.
Gain an Edge: We look to sell euro at 1.2140 and 1.2170 with a stop at 1.2190 and our take profit is a move below 1.1950 to 1.1920.
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