By Cornelius Luca
* USD/JPY moved in a way consistent with a GBP/JPY buy order, thus reaching a 2-day high of 120.69. The pair's trading range is bordered by 2 Gann 50-point pivots at 119.65, which targets 119.15 and 120.15, and at 121.05, which targets 120.55 and 121.55.
UK's Compass Group has confirmed its will sell Le Meridien Hotels to Grand Hotels Acquisition Co. Ltd., a company formed by the Principal Finance Group of Nomura International PLC, for 1.9 billion GBP in cash. Although the deal is not expected to be completed for 6 weeks, some traders are linking this news to earlier talk of EUR/GBP sales from a Japanese account and concluding this may have been for this deal. GBP/JPY has risen as much as 2.5 JPY this morning to a 2-day high of 171.04. Sales by major Japanese retailers fell 3.5% to 1.81 trillion yen in April from a year earlier after adjustment for the number of stores. Sales have declined every month since May 1998, indicating that private consumption remains weak.
The preliminary CPI for the Tokyo metropolitan area stood at 100.5 in May, down 0.6% from a year earlier, but up 0.3% from the previous month. Meanwhile, Japan's 2000 net overseas assets rose to 133 trillion yen. The outlook is mixed to slightly bullish.

Support: 119.83 (overnight low), 119.65 (Gann 50-point pivot; targets: 119.15/120.15), 119.00 (38.2% Fibonacci retracement level of the August 1998-December 1999 downtrend), 118.80 (May 24 trough; 6-month low), 118.25 (Gann 50-point pivot; targets: 117.75/118.75).
Resistance: 120.69 (overnight high), 121.05 (Gann 50-point pivot; targets: 120.55/121.55), 122.10 (20-day moving average), 122.52 (60-day moving average), 122.50 (Gann 50-point pivot; targets: 122.00/123.00), 124.00 (Gann 50-point pivot; targets: 123.50/124.50), 124.05 (May 16 peak), 124.35 (April 27 peak).

* EUR/USD initially benefited from some profit-taking on short-positions as speculation mounted that the ECB, and possibly other central banks as well, might soon sanction intervention to support the currency.
BBK President Welteke gave the ECB's first reaction to the EUR's recent heavy losses, reportedly saying the central bank was still watching the currency and that its recent weakness had boosted euro zone inflation. After Japanese Vice Finance Minister for International Affairs Kuroda threatened intervention on Thursday and Fed's Meyer said last night that the USD's rise against the EUR was puzzling, talk surfaced that the G7 might repeat its coordinated intervention of Sept. 22.
However, after touching a 2-day high of 0.8628, EUR/USD was driven back down to as low as 0.8537. Apart from the EUR/GBP sales, a U.S. moneycenter bank and a U.K. account were spotted selling the pair. The outlook is mixed to slightly bullish.

Support: 0.8537 (overnight low), 0.8480 (May 24 trough; 6-month low), 0.8401 (support line declining since Jan. 25), 0.8372 (Nov. 23 low).
Resistance: 0.8628 (overnight high), 0.8790 (38.2% Fibonacci retracement level of the June-October downtrend), 0.8848 (61.8% Fibonacci retracement level of the Nov. 27-Jan. 5 uptrend), 0.8795 (20-day moving average), 0.8918 (200-day moving average), 0.8963 (50% Fibonacci retracement level of the June-Oct.downtrend).

* EUR/JPY climbed to a 2-day high of 103.79 on short covering. The cross currency found support from the 200-day moving average at 102.39. The outlook is mixed to slightly bullish.

Support: 102.40 (overnight low), 102.39 (200-day moving average), 101.04 (May 24 trough; 5-month low), 100.00 (psychological level), 97.22 (Dec. 12 trough).
Resistance: 103.79 (overnight high), 105.80 (38.2% Fibonacci retracement level of May 1999-October 2000 downtrend), 107.39 (20-day moving average), 109.03 (100-day moving average), 109.42 (60-day moving average).

* After touching a 4-day high of 0.6102, EUR/GBP was thumped back down to 0.6030 amid talk of heavy selling from a Japanese account. When news later emerged that UK's Compass had agreed to sell Le Meridien Hotels to a group founded by Nomura for 1.9 billion GBP cash, some traders connected this to the selling, although the deal won't be completed for another six weeks.
Also giving the GBP a lift was an upward revision in U.K. Q1 growth to 0.4% from 0.3% and reports BT is selling Yell to U.S.'s Hicks for about 2 billion GBP. Cable climbed to an intraday high of 1.4180.
The GBP/USD outlook is slightly bullish.

Support: 1.4080 (overnight low), 1.4074 (May 24 low; 6-month low), 1.3966 (Nov. 24 trough).
Resistance: 1.4208 (overnight high), 1.4279 (20-day moving average), 1.4351 (60-day moving average), 1.4402 (61.8% Fibonacci retracement level of Nov.-Jan. uptrend), 1.4534 (50% Fibonacci retracement level of the Nov.-Jan. rally), 1.4456 (100-day moving average).