Archived IMT (2010.08.02)

NEGATIVE USD COMBO: The combination of weak US figures, dovish Fed rhetoric and improving Euorozone figures (PMIs) is proving increasingly detrimental for the US dollar. USDX is at risk of breaking below the 81.40s, marking the 50% retracement of the rally from the Nov 2009 low to the June 2010 high, coinciding with the 100-week MA. The bulk of the decline in 6-currency USD index is occurring against GBP and CAD components, which occupy less than 10% each in the index. Interestingly, EUR, which has the largest share of the USD index at 57%, is showing the LEAST GAINS versus the USD. Therefore, as long as EURUSD is unable to break above the key resistance of 1.3125-30, USDX losses may remain relatively stable. But this does not mean traders can ignore the sharp gains in AUD, CAD and GBP. EURGBP breaks key 0.83 support, eyeing prelim support t 0.8220 before key target stands at 0.8140.