Wednesday August 18, 2004 - 17:58:48 GMT
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YEN SOARS HIGHER
The dollar gained against its European counterparts but slipped against the Japanese yen as oil prices and military activity in Iraq continue to dominate the landscape. EUR/USD fell from 1.2380 to 1.2282 while GBP/USD fell from 1.8310 to 1.8205. In addition, USD/CHF leapt from 1.2410 to 1.2510 but USD/JPY crashed through key support at 109.70 en route to a 109.28 low and in doing so dragged EUR/JPY to a 134.68 print (down from 135.90). For the most part, it appears as if the association between the rising price of oil price and yen weakness has been fully factored into the market. So even as oil prices trounce higher , it looks as if yen shorts will continue to be tortured until some form of capitulation takes place. We look for the psychologically significant 109.00 and 134.00 to provide resistance towards the surging yen.
We see good medium term support in the “old resistance” range of 134.10 -133.90. Also, today’s 134.65 offers decent short term support. The break of 135.15 now offers congestion as does the overnight high of 135.95.
GAIN AN EDGE
We will buy EUR/JPY on a 134.00 approach with a 133.75 stop and 135.10 objective.
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