John Pitera's Market Laboratory Message Board

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Strategies & Market Trends : John Pitera's Market Laboratory

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To: John Pitera who wrote (2538)	8/1/2000 4:57:25 AM
From: John Pitera	Read Replies (3) of 33421

The US Dollar cash Index has set up a nice low risk Shorting entry point near this 110 cash level. geocities.com We even have a daily momentum divergence sell signal, and a stop loss can be place @ 111.10. time and price seem to have balanced out and a decline to 105.50 or more likely the 103 area is to be expected. JOhn ----------- Monday Summary15:49 ET $-¥: 109.34 FXfocus: The euro/dollar finished the today's session in a positive state, at 0.9266 near the high of its 0.9221 - 0.9280 day range. Although the move is not that significant its quite possible that it will become that way. Neither the 3/8 day moving averages or the MACD indicator have reversed their negative polarity however the long term weekly MACD indicator has been firmly in buy mode since early June. Interim resistance is seen at 0.9315 then 0.9380 but in order to really set the way a break of the two and a half week range high at 0.9447 would be needed. In the event that happened a major double base would be completed from today's low and the 0.9193 low of July 19. This would target a measured move to 0.9673. Long term trend resistance from the mid October 1999 highs of 1.09 is also met around the 0.9450 area so clearly a break above here would be very significant and ultimately could spell the beginning of the euro's renaissance. As we said, its all hypothetical at this point there is still a risk further US rate unfriendly data comes to the dollar's rescue in the short term. However, even in that event, the 0.9200/0.9150 area of support seen as a good strategic buying level. When all is said and done further US rate hikes will bring about convergence of GDP growth to euroland or as Greenspan recently said "a narrowing of rates of return here relative to those abroad could adversely affect the propensity of foreigners to invest in the US" For now rates of return remain attractive but clearly the impression going forward is that higher rates of return in Europe will detract some of the positive dollar influence. The Yen spent the day range-bound as it reached a 109.8 low in Asian hours, then reached a high of 109.15 in European trading before ending the day at 109.37 in the U.S. Rate differentials are weighing heavily here as further Fed tightening has returned to the discussion table.

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