Thursday August 12, 2004 - 18:14:45 GMT
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The dollar traded higher after further analysis of the US Retail Sales number showed that it exceeded expectations. After briefly trading above 1.2300, EUR/USD crashed to a 1.2217 low while USD/JPY came within a whisker of breaking through key resistance at 111.25 (110.45 to 111.24). Meanwhile, GBP/USD pierced the key psychological support at 1.8200 (1.8191 the low) before bouncing back to the technically significant 1.8240 pivot and USD/CAD skyrocketed through 1.3270 en route to a 1.3333 high. So as the market continues to wait for key data releases (tomorrow’s University of Michigan Survey) to see if the Federal Reserve was correct in its hawkish assessment of the US economy, some dollar bulls are starting to get excited now that key technical breaches have occurred in GBP/USD (1.8240) and USD/CAD (1.3270). If 111.25 and 1.2220 go in USD/JPY and EUR/USD, we may see even more dollar buying.
The break of 1.8250-40 support in GBP/USD threatens key medium term support at 1.8149. The topside is congested at 1.8275 and 1.8325. The 1.8080 level remains as a MAJOR support candidate.
GAIN AN EDGE
We will sell GBP/USD on a 1.8250 approach with a 1.8095 limit and 1.8300 stop.
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