* USD/JPY had trouble holding on to overnight gains above the 121.05 Gann 50-point pivot and slipped in stages, despite further signs the Japanese economy was weakening.
Industrial production in Japan fell 1.7% for April, versus forecasts of +1.0% for the month. Japanese consumer spending also fell 4.4% in real terms for April, the first drop since Nov 2000.
In order to deal with the weakening economy, Takeo Hiranuma, head of Japan's Ministry of Economy, Trade and Industry (METI), said he would like to ask the Bank of Japan to consider steps to bring the positive impact of its policy of "quantitative monetary easing," decided on March 19, to small corporations.
According to the latest IMM Commitment of Traders report, released late Friday for the week to Tuesday 22 May, there was a sharp increase in the number of short JPY positions just before the JPY ramped higher. After weeks of gradual paring back short JPY exposure, specs went from a net 2,315 short JPY contracts to a net 27,048 short.
The outlook is slightly bearish.

Support: 120.21 (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: 121.05 (Gann 50-point pivot; targets: 120.55/121.55), 121.38 (overnight high), 121.90 (20-day moving average), 122.58 (60-day moving average), 122.50 (Gann 50-point pivot; targets: 122.00/123.00).

* EUR/USD remains under selling pressure despite rising expectations of an ECB intervention.
The fundamental data paints a grim outlook for the euro. The latest balance of payments data for the euro zone, released Tuesday, shows a current account deficit of 2.8 billion euros in March compared with a 2.1 billion surplus in February and a flat outturn in March 2000.
The Alcatel acquisition of Lucent for $32 bln is also seen as being as a EUR negative. While the deal will be done in stock the capital flows arising from U.S. shareholders liquidating stock could put considerable pressure on the single currency.
Better-than-expected Swiss first quarter data, which came in at up 1.2% had been forecast at 1.1% for the quarter. USD/CHF had earlier climbed from 1.7743 to 1.7880 on the back of EUR weakness. However, the pair have slid to 1.7831 since the data was released. EUR/CHF has also been pulled off its high of 1.5294 to hit 1.5243.
The EUR/USD outlook is slightly bearish.

Support: 0.8536 (overnight low), 0.8480 (May 24 trough; 6-month low), 0.8385 (support line declining since Jan. 25), 0.8372 (Nov. 23 low).
Resistance: 0.8613 (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), 0.8764 (20-day moving average).

* EUR/JPY tumbled from a 6-day high of 104.48 to a 4-day low of 102.75. Key support is seen at 102.45 from the rising 200-day moving average. This cross currency has been the main driving force in FX last week, and it might resume this role this week as well.
The outlook is slightly bearish.

Support: 102.75 (overnight low), 102.45 (200-day moving average), 101.04 (May 24 trough; 5-month low), 100.00 (psychological level), 97.22 (Dec. 12 trough).
Resistance: 104.48 (overnight high), 105.80 (38.2% Fibonacci retracement level of May 1999-October 2000 downtrend),106.83 (20-day moving average), 108.90 (100-day moving average), 109.18 (60-day moving average).