Wednesday November 9, 2005 - 06:12:01 GMT
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Tricom Futures and Foreign Exchange -
Forex: Be careful not to be sucked in by any bounce in the Euro
The dollar held near two-year highs against the euro and the yen on Wednesday, with analysts expecting the U.S. currency's rally through key technical levels to spur more gains in coming days.
The dollar has gained a new head of steam in the past few sessions by breaking through its previous high for 2005 against the euro and then last year's peak, prompting a variety of accounts to bail out of short dollar positions.
The Federal Reserve's 16-month campaign of steadily tightening policy has taken overnight interest rates to 4 percent, and with the central bank expected to keep pushing rates up investors have increasingly shifted funds to the dollar.
Traders said suspected buying to protect option barriers at $1.17 in EUR/USD may provide support for now.
In the absence of major economic data today, the market will remain rangebound, and turn its attention to tomorrow's US Trade Balance data. Look for some profit-taking in the USD over the coming 24 hours, ahead of this key data. In recent months, the data has failed to scare the USD bulls, with any number around $60Bln now seen as good, whereas last year a number around $50Bln resulted in the USD being sold off heavily.
Those looking to trade, should look for an opportunity to go with the trend, that is, buy USD or sell EUR and GBP. As such, stand aside for the next 24 hours and wait for the right level to get set.
Today’s Economic Releases:
Today's Top Trades
- Sell EUR/USD around 1.1810-30
- Sell GBP/USD around 1.7500-20
- Buy USD/CHF around 1.3050-70
For more ideas send me an email, [email protected]
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