Monday August 2, 2004 - 19:16:45 GMT
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Dollar Treads Water
The dollar treaded water in a light hearted trading session. In methodical fashion, EUR/USD drifted to 1.2026 down from 1.2067 after a decent reading out of the ISM. In addition, USD/CHF rose from 1.2740 to 1.2790 but USD/JPY slipped from 111.11 to 110.72 as some EUR/JPY sellers (133.85 to 133.26) emerged in the fray. Of course, most of the market remains on edge in light of yesterday’s terror alerts but on the surface it appears as if the market has built in a tolerance level when it comes to geopolitical uncertainty. Especially if one considers the overnight price action in which the majority of dollar weakness occurred at the open where few trades took place. We look for the 1.1975 area in EUR/USD to eventually be put to the test especially if the geopolitical concerns ebb.
TECHNICALLY SPEAKING We see support at 1.1990 and 1.1975 in EUR/USD marked by the key psychological 1.1950 level. On the topside, 1.2122 still offers medium term resistance while 1.2070 is short term congestion.
GAIN AN EDGE We will buy EUR/USD at 1.1965 with a 1.1945 stop and 1.21 limit.
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