By Cornelius Luca
* USD/JPY remained firm overnight, albeit within Wednesday's range of 121.55-122.44. The pair still finds it difficult to break the resistance of the 122.50 Gann 50-point pivot. USD/JPY was underpinned by comments from Takashi Imai, chairman of the Keidanren, Japan's largest business lobby group. Imai said that Japan is ready for a stagnant economic for a few years due to deflationary pressures from structural reform. He added that it is inevitable that deflationary pressures will increase as a result of disposals of bad loans. But Bank of Japan Governor Masaru Hayami said he doesn't think there is a need to take additional monetary measures now, suggesting he is unwilling to shift policy at the BOJ's 2-day monetary policy meeting on Thursday and Friday.
The outlook is mixed, with USD/JPY stuck between 121.05 and 122.50.

Support: 121.67 (overnight low), 121.05 (Gann 50-point pivot; targets: 120.55/121.55), 120.91 (20-day moving average), 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), 118.30 (June 1 trough; 3-month low), 118.25 (Gann 50-point pivot; targets: 117.75/118.75).
Resistance: 122.26 (overnight high), 122.40 (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).

* Unable to convincingly break the resistance of the 20-day moving average at 0.8557, EUR/USD fell to a 2-day low of 0.8506 on long liquidation. The ECB's monthly bulletin reported new projections that assumed a "relatively brief" U.S. slowdown, although it was possible that the international economy would grow less than assumed in 2002. Domestic demand will decelerate from its brisk pace in 2000, the ECB said. The bulletin also included a warning to governments not to reverse their good work, with the ECB advising them to resume consolidation, not delaying balancing their budgets. The ECB warned about their forecasts, saying that the euro has fallen, and oil prices have risen since the projections were made. Italian industrial production for April has come in worse than expected. It has recorded its biggest drop since May 1999, falling down an adjusted 1.8% for the year and 1.9% versus March. France's private sector created 116,000 new jobs in Q1, a 0.8% increase from the Q4 of 2000 and up 3.5% on year, according to final non-farm payroll data released by French national statistics institute INSEE and the Labor Ministry. Rumors that had been circulating earlier that the SNB was going to announce a cut to its official interest rates were well off the mark. However, the SNB has left its key Swiss Libor target range unchanged at 2.75%-3.75%. The bank said that economic prospects have hardly changed since the last rate cut.
The EUR/USD outlook is bearish.

Support: 0.8492 (overnight low), 0.8411 (June 11 low; 6-month low), 0.8372 (Nov. 23 low). Resistance: 0.8557 (20-day moving average), 0.8559 (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), 0.8889 (200-day moving average).

* EUR/JPY fell to a 2-day low of 103.60 under the drag of EUR/USD. The cross currency faces support at 103.47 from the declining 20-day moving average. The outlook is bearish.

Support: 103.60 (overnight low), 103.47 (20-day moving average), 102.91 (200-day moving average), 99.85 (June 1 low; 5 1/2-month low), 97.22 (Dec. 12 trough).
Resistance: 104.49 (overnight high), 104.67 (June 13 high), 105.80 (38.2% Fibonacci retracement level of May 1999-October 2000 downtrend), 107.54 (60-day moving average), 107.96 (100-day moving average).

* GBP/USD edged lower from a 4-day high of 1.3926. The pair showed no reaction to another strong month of retail spending in May. Volumes rose a seasonally-adjusted 0.8% on the month and 6.4% on the year, well above expectations for a monthly increase of 0.3% and an acceleration from April's 0.6% growth.
The outlook is mixed.

Support: 1.3894 (overnight low), 1.3688 (June 12 low; 15 1/2-year low), 1.3660 (February 1986 trough).
Resistance: 1.3926 (overnight high), 1.4090 (20-day moving average), 1.4244 (60-day moving average), 1.4354 (100-day moving average).