Monday July 17, 2006 - 04:00:21 GMT
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Weekly Technicals: Can the Dollar rally pierce major resistance levels this week?
by Marc Spaelti
due to a 1-week absence, technical update will only appear today
EURUSD: The short-term bearish trend is heading into its 2nd week, its resistance has advanced to 1.2670 and it will cross the medium-term key support on Wednesday at 1.2595. That later is the key support at least for the first two days this week, while it holds we suggest fresh longs for a return to the 1.2700 pivot-resistance, a daily close above it should drive the pair back and its bullish path in search of 1.30, strong resistance at 1.2820 on the way higher. If the Dollar continues bid for another week, prospects are for a fall to 1.2470, next medium-term key support, a lower weekly close would be very Euro negative calling for prolonged Dollar strength in coming weeks.
GBPUSD: Cable has dipped with the Euro but failed again to make a significant low last Friday. It start the week above slow-rising medium-term support at 1.8310, this line will have reached 1.8370 by the end of this week, keep a bullish bias while that holds. On top the 2-month-old bearish resistance is presently at 1.8465, additional strong resistance and key level at 1.8530, it needs to close a day above that to move on towards 1.90. In case of a fall through 1.83, additional strong support 1.8250 may hold intra-day, failure to do so send the pair to 1.8090 for a full retracement of the early July rise
USDJPY: Here too the Dollar is soon running into strong medium-term resistance, 116.60 first strong point, bearish trend at 117.00 will drop just 15pips by Friday. Breeching these resistance levels call for a follow-on move up to 119.20, we are not that bullish an believe the Dollar will turn ahead of 117. First strong support at 115.50, 2-month bullish trend-line at 114.65 will reach 114.85 by Friday, a break of that is bearish for 113.85 initially and 111 eventually.
USDCHF: The Dollar was bid up to 1.2380 on Friday. Medium-term bearish resistance is very nearby at 1.2400, key resistance at 1.2465 must hold, a daily close above can see the Dollar rally to 1.2600 or as high as 1.2750 this week. Unless we see a daily close above the bearish trend-line, we like to maintain a bearish $-bias. A dip back to strong support at 1.2300 and 1.2260 key-level should be done easily, a lower daily close keeps the pair on track for a bearish break to 1.20, from where a sharp sell-off could lead it to much lower levels in the weeks to come.
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