Jim Cote //
Chicago, July 19 (BridgeNews) - Currency markets were quiet after the dollar recovered most of its overnight losses. The greenback rebounded from a one-month low of 123.21 yen, which trapped euro/yen within a 107.70-108.50 range. Japanese Vice Finance Minister Toshiro Muto warned the markets about yen volatility, saying stable FX levels are important. The euro slipped from a two-month high of 87.90 cents to the dollar ahead of the European Central Bank council meeting, which left refi rates unchanged at 4.50%.

Dollar/Swiss franc bounced from a fresh 2 1/2-month low of 1.7154, sterling/dollar fell from a seven-week high of 1.4222, while dollar/Canada trimmed gains after reaching a seven-week high of 1.5439. Positions squaring should dominate the session ahead of the Group of Eight summit that commences Friday in Genoa.
Thursday's economic agenda features May goods and services trade and June leading economic indicators.

Current Previous Change Global Global
NY open NY close low high

USD/JPY 123.53 123.87 -0.34 123.21 124.19
EUR/USD 0.8722 0.8741 -0.0019 0.8711 0.8790
EUR/JPY 107.74 108.30 -0.56 107.70 108.55
GBP/USD 1.4172 1.4209 -0.0037 1.4168 1.4222
USD/CHF 1.7277 1.7213 0.0064 1.7154 1.7290
USD/CAD 1.5412 1.5368 0.0044 1.5356 1.5439
AUD/USD 0.5160 0.5148 0.0012 0.5142 0.5184
NZD/USD 0.4142 0.4128 0.0014 0.4132 0.4165
SP.1 1217.60 5.30 1207.90 1220.00
ND.1 1704.00 20.00 1655.00 1714.50

USD/JPY extended its recent losses in hitting a 1-month low of 123.21, which many attributed to the unwinding of carry trades on the situation in Argentina.
Japanese Vice Finance Minister Muto has said stable FX levels are important. He also reportedly said that he is watching equity moves closely.
The outlook is only slightly bearish as technical support looks solid.

Support: 123.21 (overnight low), 123.00 option strike price, 122.69 (60-day moving average), 122.50 (Gann 50-point pivot; targets: 122.00/123.00).
Resistance: 124.5 (overnight high), 124.58 (20-day moving average), 125.50 (Gann 50-point pivot; targets: 125.00/126.00), 126.15 (July 6 high; 3-month high), 126.84 (April 2 high; 29-month high).

EUR/USD registered a 2-month high of 0.8790 but gave back all of its overnight gains on profit-taking ahead of the ECB's announcement it would leave rates unchanged. No press conference was scheduled.
The outlook is neutral as recent gains are digested.

Support: 0.8711 (overnight low), 0.8544 (20-day moving average), 0.8350 (July 6 low; 7-month low).
Resistance: 0.8790 (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).
EUR/JPY is trapped within a 107.70-108.50 range with 108.00 presenting round-numbered resistance.
The outlook is bearish as carry trades are unwound.

Support: 107.70 (overnight low), 107.70 (100-day moving average), 106.46 (20-day moving average), 105.80 (38.2% Fibonacci retracement level of May 1999-October 2000 downtrend), 104.54 (June 20 low), 104.45 (200-day moving average), 99.85 (June 1 low; 5 1/2-month low), 97.22 (Dec. 12 trough).
Resistance: 108.55 (overnight high), 109.72 (May 16 high; top of consolidation area), 111.02 (50% Fibonacci retracement level of May 1999-October 2000 downtrend).
GBP/USD showed little reaction to data which showed that the U.K. recorded a greater-than-forecast PSNCR deficit of 8.166 bln GBP in June, while the non-EU trade deficit widened to a record 3.13 bln GBP in the same month. EUR/GBP was carried to a 5-week high around 0.6190 as the EUR firmed elsewhere, while cable dipped off an overnight, 3-week high around 1.4225 to reach the 1.4160 area.
The outlook is neutral.

Support: 1.4160 (overnight low), 1.4101 (20-day moving average), 1.3911 (June 20 low), 1.3688 (June 12 low; 15 1/2-year low), 1.3660 (February 1986 trough).
Resistance: 1.4193 (overnight high), 1.4143 (60-day moving average), 1.4224 (June 27 peak), 1.4247 (100-day moving average).