Tuesday June 29, 2004 - 17:51:08 GMT
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DOLLAR STRENGTH CONTINUES AHEAD OF FOMC
The dollar leapt forward ahead of tomorrow’s critical FOMC results. In a surprisingly volatile trading day, EUR/USD crumbled from 1.2195 to 1.2105 while GBP/USD disappeared through key technical support at 1.8180 before finally settling at 1.8059. Meanwhile, USD/CHF raced higher (1.2515 to 1.2635) and AUD/USD followed its high yielding brethren (British pound) lower (.6999 to .6895). Surely, a much better than expected US Consumer Confidence number ignited today’s dollar rally but surely all eyes and ears will still be firmly focused on tomorrow’s meeting as well as the Thursday’s Tankan Report and of course Friday’s US Non Farm Payroll Report. But make no bones about it; a dovish Federal Reserve statement will in all likelihood reverse all of today’s gains. Tomorrow’s action promises to be riveting and plentiful.
TECHNICALLY SPEAKING We see critical support at 1.2100 and 1.2050. Today’s break of 1.2120 (previous day’s low) almost solidifies yesterday’s move above 1.2200 as a false breakout. Now a break of 1.2050 should allow for a test of 1.1980.
GAIN AN EDGE We are short EUR/USD at 1.2120 and will resell on a 1.21 break with 1.2150 stop and 1.2010 limit.
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