Wednesday August 2, 2006 - 04:12:01 GMT
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Daily Technicals: Dollar falters
by Marc Spaelti
EURUSD: Short-term trend-line held and the Euro finally moved up higher to reach 1.2835 so far. Next large resistance is at 1.2865, the July high. With the outlook of an ECB rate hike tomorrow and bullish trend intact, a follow-through move to 1.2950 medium-term resistance is our premium choice for the day, therefore stay long but consider taking some profit at 1.2850. Initial support at 1.2820, trend-line at 1.2770, we suggest buying ahead of that strong support in case we see a dip today.
GBPUSD: 1.8620 held well, Cable rallied along with the Euro to reach a high of 1.8790 so far. This is a tad short of the 1.8850 target, ground that can be covered today if initial support at 1.8755 holds. A break there has room for a correction to 1.8660, bullish trend-line is another cent lower at 1.8560, we doubt we will touch that line again this week. Top the upside, a daily close above 1.8850 can see the pair try the 1.90 key resistance, strongly suggest squaring off all longs once we cross into the 1.89 handle. The present rise started at 1.8150 and it seems we have traveled very far on very little news over the past two weeks.
USDJPY: The Dollar only had a brief spike to 115.30 before it tripped and fell to 114.20, the level that held on Monday. We firmly maintain a medium-tem bearish view, targeting much lower levels by the end of the month. A break of this double-bottom at 114.20 should see an immediate 70-pip drop to 113.50, the last strong support ahead of the 111-area. Alternative is to trade sideways, hovering in a 1-Yen wide range around 114.65 for another day or two. USDJPY is bound to trade lower, but it has so far only move in concert with European currencies, if the Euro stops climbing USDJPY should stop dropping.
USDCHF: Itâ€™s the least bearish Dollar of the lot, key support at 1.2260 held firm so far. Bearish resistance at 1.2285, continued pressure may trigger a stronger Dollar-sell-off and the pair risks to fall to 1.20 quickly with strong support at 1.2220 and minor at 1.2150. On top 1.2310 is pivot resistance, a higher daily close lifts the pair back above 1.24.
@06:00GMT UK Consumer Confidence July
@09:30GMT UK PMI Construction July
@10:00GMT Euroland PPI June
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