Wednesday November 30, 2005 - 12:40:33 GMT
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FX Thoughts for the Day - www.fxthoughts.com
FX Thoughts for the day - Evening - 30-11-05....1224 GMT
Euro-Yen @ 140.72/77....Chances of significant heights
R: 141.17 / 141.56
S: 140.43 / 140.16
The Cross is just a short distance away from the previous Highs of 141.17 (02 and 03-Nov-05), 141.56 (Dec-04) and 140.94 (May-03). The Cross is strong because the Yen continues to remain weak against the Dollar (USD-JPY trades near 119.50) and the Euro is not as weak as might have been expected against the Dollar (EUR-USD is trading near 1.1785).
According to the synthetic EUR-JPY Monthly Close chart we maintain, the Cross has broken through a Trend Resistance coming down from near 209.82 in 1982. This may be very significant.
Question is, will the Cross break into fresh new higher ground in December? The possibility cannot be ruled out while the market trades above the immediate Supports at 140.43 and 140.16 on the Daily charts. A Day Close above 141.20 either today or tomorrow may serve to take the Cross up towards 141.90-142.05. THAT would be a very significant rise and could open up the way towards 145 and higher in the weeks/ months ahead.
However, in case the immediate Supports at 140.43 and 140.16 are broken any time soon, we may see a fall towards 139.60 and the chances of a very strong upside close (in the next few days) may be negated or at least stalled/ delayed.
Currently (since the morning), the Cross is trading quiet between 140.50-141.00, but some directional movement may be expected either in the late US session or sometime tomorrow.
Since we still favour more upside in Dollar-Yen (towards 121.45) and there is a 50% chance of EUR-USD moving up towards 1.1875-1925 in the next few days, there is a decent chance of the Cross climbing past 141.65-95.
$-Swiss @ 1.3151/56....Between 1.30-33 through December?
In retrospect, it may seem that Monday's fall to 1.2992 was just a means of shaking out some Dollar Longs. The subsequent recovery to 1.3150 over yesterday and today has kept the overall uptrend alive as of now at least. At least two Day Closes below 1.3000 would now be needed to ensure that the current uptrend has come to an end.
That does not mean the Dollar will sprint away to the upside immediately from here. It is more likely to trade up-down-up-down between 1.30 and 1.33 for the rest of this year. Such a long consolidation (if it occurs) would provide an excellent base from where it can rise towards 1.35 and higher in 2006.
To summarise....A fall below 1.3000 (if it happens) may trigger an immediate fall of 200 pips or so and might signify an end to Dollar's strength. A rise above 1.3300 (whenever it takes place) may trigger a rally towards 1.35 and might signal further Dollar strength. In the meanwhile the 1.30-33 range rules.
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