Wednesday July 7, 2004 - 18:17:43 GMT
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DOLLAR STRUGGLES AGAIN
The Dollar lost some additional ground in muted trading after the European session featured a splash through key resistance at 1.2330 in EUR/USD en route to an initial 1.2380 high. Eventually, EUR/USD traded as high as 1.2390 right around the NY lunchtime with option protected sales of the 1.2400 level being cited as the main reason why the dollarís slide didnít t continue even more. Meanwhile, USD/JPY dropped down to 108.18 down from yesterdayís high of 109.73 and USD/CAD came within a whisker of the supposed stops loss laden 1.3170-75 area (1.3285 to 1.3173). So is todayís dollar sell off more a credit to traderís apathy and illiquidity or is the dollar bull run of 2004 slowly but surely coming to an end. The US Presidential election is quickly approaching and so is the likelihood of considerable uncertainty surrounding the future of US economic policy. We expect the dollar sell off to continue but look for frequent consolidation to make for an orderly depreciation.
TECHNICALLY SPEAKING We see key trend line resistance above the psychologically significant 1.2400 located at 1.2425. The downside is supported at 1.2335 (old resistance) as well as at 1.2250. The Slow Stochastic is neutral.
GAIN AN EDGE We will sell EUR/USD at 1.2410-20 with a 1.2335 stop and 1.2285 limit.
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