Monday August 9, 2004 - 18:31:14 GMT
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TIGHT RANGES GOING INTO FOMC
We have seen range bound trading today as all eyes are set on tomorrow’s FOMC meeting. The euro traded at a two-week high against the dollar as it has held Friday’s gains. EUR/USD traded up to the 1.2290 area before retreating and is now slightly down on the day. We did see a yen advance in Asian and early European trading as a result of a Japanese report that showed machinery orders exceeding expectations. The report indicated that factories ordered 3.9 percent more equipment in June. This was nearly four times the median forecast. USD/JPY made a move down to 110.14 on the news as the 110 support area held. USD/CAD had a bid tone through most of the session as a result of short covering. There is speculation of a large barrier option at the 1.3050 level. We expect little volatility through the remainder of the session as the dollars near term future will be set by the 2:15 EST announcement tomorrow.
Euro/Dollar remains in a tight range after Friday’s up move. The Relative Strength Index is a very positive 61.85 on a 60 minute chart. There is trend line resistance at 1.2320/30 and support seen at 1.2210/20. The ADX is a 34.13 reading supporting the strong Euro.
GAIN AN EDGE
We look to buy Euro on a dip back to 1.2210 with a stop below 1.2175 ands a take profit of 1.2315.
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