Friday September 3, 2004 - 18:29:17 GMT
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Euro Plunges into the Abyss
Euro Plunges on Release of Jobs Data. The greenback got a healthy boost today on the US NFP as we came within expectations and last month was revised upward to +73K from +32K. The NFP was expected to roll in between 100K and 150K and we saw 144K as a good number, this along with the revision to last month was seen as positive for the dollar as we rose from 1.2600 to 1.2700 in an instant. The euro plunged from 1.2195 to 1.2070, after a brief rebound towards 1.2140, we grinded lower towards a 1.2050 option that was rumored in the market. The 1.2050 level was taken out yet did not sustain and we have bounced from the 1.2041 lows since to be range bound in a 1.2050-1.2070. The dollar did manage to gain a bit more steam even after the worse than expected Non-ISM data. The expected number was somewhere in the ball park of 62 and came in a lot lower at 58.2. This again should have been a dollar negative but the greenback shrugged off the news and posted new highs at 1.2725. The dollar did get a big boost against the yen from 109.10 lows to a NY session high of 110.70. The rumored offers at 110.80-111.00 should put a cap on the currency for the rest of today. The Dow has not given any signs of recovery for today as it has been down for most of the day and is hovering around flat late in the NY session. There was a huge rally shown yesterday late in the afternoon heading into the holiday weekend. With the summer coming to an end and the return to possible normal markets with all traders back from vacation we could see us break out of this wide range that we have been in for some time now. The next move could be a breakout of 1.1970 and a trend lower in the euro possibly start to form.
Technically Speaking: The euro came up just short of breaking the 2 year trend line of 1.2200, the only reason in my view we broke this level was on the back of the pepper spray incident in Washington the other day which saw us trade up to 1.2222. If not for the rumor we would have stayed below the 1.2200 trend line and with this intact we should head much lower from here. A break of 1.1970 a triple bottom in the market will see significant losses and we could head to the next trend line of 1.1780 from there.
Gain an Edge: We look to continue to sell the rally in euro towards 1.2140 with a stop above 1.2200 or we will sell the break of 1.1970 with a stop at 1.2050 and our objective is long term trend line support at 1.1780.
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