Friday August 20, 2004 - 18:31:20 GMT
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DOLLAR BREAKS UP
The dollar soared higher as oil prices failed to trade over the key psychological level of 50 USD a barrel. EUR/USD, too, failed on its attempt to overtake a psychological barrier (1.2400) and ended up falling from 1.2375 to 1.2279. Meanwhile, USD/CHF rammed higher (1.2450 to1.2535) with the help of a surging EUR/CHF (1.5360 to 1.5415) and USD/JPY briefly traded higher (108.93 to 109.70) before quickly retreating back to the pivotal 109.20 region. Given the fact that today’s moves were mirror opposites of yesterday’s leads us to believe that liquidity and stop loss orders had more to do with the dollar’s gains than anything driven from technical or fundamental factors. We expect more of the same whipsaw activity as we head into the last 2 weeks of summer.
We see KEY medium term supports at 1.8130 and 1.8080 in GBP/USD. Breaks here could lead to a serious unwinding of GBP longs and eventually put pressure of the 1.7850 level. The topside again is filled with choppiness and temporary sell points at old supports (1.8275, 1.8310).
GAIN AN EDGE
We will sell GBP/USD at 1.8125 with a 1.8200 stop and 1.7850 objective.
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