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FX ANALYSIS: Deja vu in the Foreign Exchange markets as the US dollar
continued to weaken during European trade with the US unit's suffering
pretty much uniform across major pairs. The repeat offenders were the
model and momentum accounts who once again on the European open started
to dump the dollar and this practice continued throughout the session.
With the upcoming event risk of Friday's US trade data the already
beleaguered dollar could be in for more downside pressure if the trade
gap widens as are the whispers in the markets. Medium/long term accounts
long of dollars are keeping a close eye on proceedings and a sustained
break of key levels at Y110.00 in dollar-yen and $1.2500 in euro-dollar
coupled with a worsening trade gap could entice these accounts to join
the party and start squaring their positions. Euro-dollar has a lot of
wood to chop to break through $1.2500 with exotic option barriers
offering resistance as well as a host of technical levels including the
100 day moving average which today comes in at $1.2465.
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