Monday June 28, 2004 - 20:46:37 GMT
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Early this morning the markets were caught off guard with the surprise return of sovereignty to Iraq two days ahead of schedule. There was slight initial Greenback strength off this news, but it was short lived as the Dollar then proceeded to weaken against the Majors. This morning also saw the release of Personal Income, which came in up .6% vs. expectations of up .5%, and Personal Consumption indicated a rise of 1.0% vs. expectations up .8%. There was little reaction in this news initially as the markets are currently priced for a .25 basis point cut on Wednesday. As the day proceeded the Greenback became bid. Cable made a run up to the 1.8340 level before reversing as the Dollar strengthened and eventually it worked its way back under the 1.82 figure. We have seen some buying interest near the 1.8250 area. EUR/USD made a move over the 1.22 figure, making a run up to the 1.2230 level. It too reversed on the Dollar strength and moved back under the 1.22 figure as stops got run. We have seen some EUR support in the 1.2160 area. USD/YEN saw some strength early as it continued to repair some of last week’s weakness. We saw it bid up to the 108.30 area before weakening and reversing back down to the 107.70 level. Subsequently, we have seen a move back over the 108.00 figure on the Greenback strength.
TECHNICALLY SPEAKING We see important short term support at 1.2120 in EUR/USD. The break back below “old resistances” at 1.2180 and 1.2200 has temporarily negated the bullish EUR/USD from an intraday perspective. The Slow Stochastic is still not in oversold territory (39%).
GAIN AN EDGE We will sell EUR/USD on a 1.2120 break with a 1.2150 stop and 1.1980 objective.
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