Cornelius Luca // New York, July 17 (BridgeNews) - The dollar was largely mixed as traders rehashed old factors. Japanese officials volunteered to ease monetary policy if necessary to support the deteriorating local economy, while the euro-zone policy makers emphasized budding signs of economic recovery. But the greenback remains sidelined before the release of the U.S. June industrial production and capacity utilization.

Euro/dollar and sterling/dollar trimmed losses after dipping to a one-week low of 0.8491 and a four-week low of 1.3936, respectively, while dollar/yen and dollar/Swiss franc gave back gains after climbing to six-day highs of 125.67 and 1.7804, respectively. Dollar/Canada fell further on long liquidation after peaking Monday at a 1 1/2-month high of 1.5425. Despite recent volatility in the U.S. dollar/yen exchange rate, Japanese Finance Minister Masajuro Shiokawa said currency issues will not be a major economic issue at the Group of Eight nations summit meeting to begin Friday in Genoa, Italy.
The intraday outlook for both euro/dollar and dollar/yen is mixed.
Current Previous Change Global Global
NY open NY close low high
USD/JPY 125.24 125.54 -0.30 125.10 125.67
EUR/USD 0.8516 0.8529 -0.0013 0.8491 0.8532
EUR/JPY 106.65 107.03 -0.38 106.55 107.09
GBP/USD 1.3983 1.3997 -0.0014 1.3936 1.4010
USD/CHF 1.7755 1.7722 0.0033 1.7705 1.7804
USD/CAD 1.5364 1.5381 -0.0017 1.5347 1.5386
AUD/USD 0.5064 0.5076 -0.0012 0.5055 0.5078
NZD/USD 0.4053 0.4060 -0.0007 0.4053 0.4069
SP.1 1206.80 -3.70 1205.30 1210.80
ND.1 1692.00 -17.50 1692.00 1709.50

USD/JPY reversed gains after marking a six-day high of 125.67 after traders lacked the impetus to hold the pair above 125.50, the Gann 50-point pivot that targets 125.00 and 126.00.
A series of Japanese officials declared their willingness to ease further the local monetary conditions.
Bank of Japan Governor Masaru Hayami said the central bank could consider easing monetary policy further if economic conditions warrant it. But Hayami ruled out any imminent easing, saying that a current account balance of 5 trillion yen ($398 million) is sufficient to support the economy for now. Minister for Economic and Fiscal Policy Heizo Takenaka prodded the Bank of Japan for further monetary easing of its already ultra-easy policy. Takenaka's comments come just after Finance Minister Masajuro Shiokawa called upon BOJ to consider further easing to combat deflationary pressures in the economy earlier. However, Takenaka said despite falling prices, a deflationary spiral is by no means imminent.
Shiokawa also repeated that the Bank of Japan should consider further monetary easing to cope with deflation here.
Japan's index of leading indicators, which shows economic conditions two to six months ahead, was revised up to 77.8 in May from a preliminary 71.4, the Economic and Social Research Institute at the Cabinet Office announced. The leading index was above the critical 50.0 "boom-or-bust" level after it was below the level for the previous four consecutive months.
The intraday outlook is mixed to slightly bearish, with traders eyeing 125.00. The short-term outlook remains bullish.

Support: 125.10 (overnight low), 124.66 (20-day moving average), 124.00 (Gann 50-point pivot; targets: 123.50/124.50), 123.86 (July 11 low), 122.69 (60-day moving average).
Resistance: 125.50 (Gann 50-point pivot; targets: 125.00/126.00), 125.67 (overnight high), 126.15 (July 6 high; 3-month high), 126.84 (April 2 high; 29-month high), 127.00 (Gann 50-point pivot; targets: 126.50/127.50).

EUR/USD bounced from a one-week low of 0.8491 toward the more comfortable area around the 20-day moving average. The pair was mildly underpinned by generally good economic news from the euro zone. German economic growth through the first 6 months of 2001 was "about" 1.3% in real terms, a pace which should increase and create a "solid" chance of reaching the government growth target of "around" 2.0%, said Economics Minister Werner Mueller.
France posted a current account surplus in May after a revised 0.5 billion-euro deficit in April amid an improvement in receipts from the exports of goods and services, the French Finance Ministry reported. The May current account surplus was 0.5 billion euros on an unadjusted basis, and 0.3 billion euros ($256 million) in seasonally unadjusted terms. The intraday outlook is mixed.

Support: 0.8491 (overnight low), 0.8350 (July 6 low; 7-month low), 0.8245 (1.382% Fibonacci extension level the Jan. 6-May 4, 19 downtrend; target of fifth Elliott wave), 0.8228 (Oct. 26 low; lifetime low).
Resistance: 0.8523 (20-day moving average), 0.8532 (overnight high), 0.8642 (July 11 peak), 0.8673 (June 15 peak), 0.8790 (38.2% Fibonacci retracement level of the June-October downtrend).

EUR/JPY marked time in a tight range, mostly on a negative note. There are no reasons to expect a big move Tuesday, as the pair has been trapped in a sideways market for one month. Immediate support is seen at 106.24 from the 20-day moving average.
The intraday outlook is mixed to slightly bearish.

Support: 106.55 (overnight low), 106.24 (20-day moving average), 105.99 (60-day moving average), 105.80 (38.2% Fibonacci retracement level of May 1999-October 2000 downtrend), 104.54 (June 20 low), 104.37 (200-day moving average).
Resistance: 107.09 (overnight high), 107.74 (100-day moving average), 107.98 (July 11 peak), 109.72 (May 16 high; top of consolidation area), 111.02 (50% Fibonacci retracement level of May 1999-October 2000 downtrend). For additional levels see story .877.

GBP/USD trimmed its losses after falling to a four-week low of 1.3936, as EUR/GBP slipped within Monday's range. The RPIX measure of U.K. underlying inflation stuck defiantly at an annual rate of 2.4% in June, disappointing expectations it would drift back to 2.3% after last month's spike.
The intraday outlook is mixed to slightly bullish. The upside presents more risk due to the current short positions.

Support: 1.3936 (overnight low), 1.3911 (June 20 low), 1.3688 (June 12 low; 15 1/2-year low), 1.3660 (February 1986 trough).
Resistance: 1.4010 (overnight high), 1.4087 (20-day moving average), 1.4150 (60-day moving average), 1.4187 (July 11 high), 1.4224 (June 27 peak), 1.4250 (100-day moving average).