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The market waits now to see if Greenspan will try to clarify his
earlier remarks, sure to rile eurozone official coming so close to the
G7 summit in Florida.
The G7"s final communique argued against "excess volatility and
disorderly movements" in exchange rates and served to put a temporary
floor under the greenback earlier in the week.
If Greenspan"s says nothing further about the dollar, the FX market
is likely to test the upside in the euro-dollar, with an eye on a break
over the Jan. 12 high at $1.2898, traders said.
"We might see some resolution of this standoff," observed Andrew
Chaveriat, technical analyst at BNP Paribas.
While market players were "bulled up" up for a topside euro
breakout, potentially over $1.3000, the charts suggested that a short
term "shake out" to the downside could also be seen.
"You might fill the gap between $1.27 and $1.28 and see a test of
$1.2750 or even $1.2700/10 -- that will probably be the extent of it
though," Chaveriat said.
Longer term prospects remained euro bullish, paving the way for a
break over $1.30 to the next key resistance level at $1.3055, the 76.4%
retracement of the synthetic euro equivalent of the 1995 to 2000
dollar-Deutsche mark move).
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