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US Dollar could gain momentum – Feb 07

February 7, 2013
GMT 3:33 – EURO @ 1.3506 – Two days ago in my daily post, I did warn that the developments in Spain and Italy could be challenging and has potential to spoil the ongoing European party. Yesterday, was comparatively a quieter day in the absence of any major economic data announcement. Market is looking nervous and the Bullish sentiment on the European market seems to fading, as polls suggest that former Italian PM Berlusconi is making a comeback. This may not be good news because it is thought that his tax and reform policies is in negation of current Italian Ministers policy that does not suit Italy.Similarly Spain’s PM Rajoy is no out of woods and is yet to provide evidence that he is not a party to the the corruption scandal. Both are unsettling issues that can bring more miseries in the Euro-zone region.

I think with quite a few event in Europe and then report on US initial claims due to be released today, initially we could see trading in ranges with choppy moves possible. Market will be more focused on ECB monetary policy meeting,as I am expecting rates to remain unchanged, but language will once gain play key roll in determining the market. Quieter approach could further dent market sentiment. BoE decision on rates and specially its incoming Governor Carney’s testimony to UK Treasury Select Committee before MPS will be of key relevance.
Overall, my gut feeling is that US Dollar will make gains and gold will still be a good sell on rise, unless it is able to penetrate beyond $ 1690 convincingly.  
EURO @ 1.3506 = Any up-move of Euro should find resistance around 1.3530 and I do not see a break of 1.3560-70 prior to ECB policy announcement. Looking for dip to test 1.3475-80 zones with chances for a test of 1.3460, but will not be surprised to a quick bounce back before ECB announcement.
GMT 3:39 – GBP @ 1.5648 = May find top around 1.5675-85 and unless 1st barrier, 1.5720 is surpassed risk is for a drop to 1.5610-20 zones. Next major support area is 1.5550-70.

GMT 3:44 – JPY @ 93.46 = Likely to remain in 92.90-93.70 range. Bottom hunting is preferred and would Sell Yen and buy USD with STOPS 92.70  
GMT 3:47-  AUD @ 1.0305 = Nervous and choppy, as long as Aussie fails to surpass 1.0340-50 levels, AUD will remain under pressure. If 1.0280 surrenders. 1.0240-50 is the next support level
GMT 3: 53 – GOLD @ $ 1678.70 = Little tricky today, as $ 1674-75 is the support and level, which looks a good buy as long as above $ 1670-71 see good prostect for $ 1682. See risk for test of $ 1685-88zones. Break below $ 1667 negates upmove
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