Wednesday June 23, 2004 - 09:49:14 GMT
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INVESTICA Ltd - www.investica.co.uk
Dollar open to speculative plays
There will be persistent caution ahead of the Fed rate decision next week. This may leave the way open for a sharp move if short-term players can trigger a break of important technical levels, although range trading is more likely for now with a covering of short dollar positions if support levels hold. Overall, long Euro positions offer little immediate value above 1.2180, but with support likely around 1.2075. A break above 1.22 could trigger further gains, but this will be tough.
The Euro found support above the 1.2060 level on Tuesday and moved higher in New York. The Euro pushed to a high of 1.2185 in early Europe on Wednesday before easing back to 1.2125. There has been some evidence of longer-term dollar selling due to current account concerns, but shorter-term players have dominated.
Overall, however, there has been a lack of fresh incentives and trading volumes have been low. Although this will tend to encourage range trading, there will also be the potential for short-term players to test recent ranges and aim to trigger a breakout. If stop losses can be triggered, there would be the potential for a sharp move, although it is more likely that existing ranges will hold.
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