Friday July 30, 2004 - 19:26:45 GMT
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WILL NOT BACK DOWN
The US dollar managed to hold its recent gains despite the weaker then expected GDP figure for the 2nd quarter that was released this morning. The number reflected an expansion of 3 percent while the median forecast was for 3.7 percent. The prior quarter’s figure was raised from 3.9 percent to 4.5, which partially offset the recent quarter’s weakness. Initially, the dollar fell sharply on this news as the DXY hit a low of 89.34 before finding its footing and reversing to the unchanged level on the day. EUR/USD made a run over the 1.21 figure but could not hold the gains and sold off for the remainder of the day. The EUR then eyed the 1.19 handle but stopped just short of breaking the 1.20 figure. The dollar strength corresponded with the release of the University of Michigan Consumer Confidence Number, which came in at 96.7 vs. expectations of 96.2, and a large surge in the Chicago Purchasing Manager Index (64.7 actual vs. expectations 60.0). We did see some USD/JPY weakness which began in European trading, which was brought on by a rally in the Nikkei. The pop in that index was the largest in 6 weeks and eased some of the concerns over the recent dumping of Japanese equities.
Dollar/JPY has short term support at 111.00/110.90 there is also near term resistance at 111.70/80. The Relative Strength Index is 40.58 on a 60 minute chart and the trend remains up. The Average Directional Index is 25. In the longer term there is support at 110.25/35.
GAIN AN EDGE
We look to buy $/Jpy at 110.95 with a stop below 110.30 and a take profit of 112.30
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