13 August 2001, 20:59  US FX Daily Outlook: Dollar down across board; euro rallies

Cornelius Luca //
New York, Aug. 13 (BridgeNews) - The dollar opens the week on a soft note versus its major counterparts as the euro rallies to a fresh three-month high of 89.95 cents to the dollar. Increasing doubts that the U.S. economy will rebound before 2002, although the euro-zone economy remains equally stagnant, boosted the 12-nation currency.

Dollar/Swiss franc bored to a five-month low of 1.6821, while the dollar declined versus both the yen and the sterling, but remained within recent ranges, as traders looked for new factors. One day after peaking a 17-day high of 1.5435, dollar/Canada slipped to a four-day low of 1.5371 on long liquidation.
With no domestic economic events to be released Monday, dollar/yen should remain sidelined before the Bank of Japan policy board makes a decision Tuesday. After breaking significant resistance overnight, euro/dollar looks well poised to extend gains to the psychological 0.9000 level.

Current Previous Change Global Global
NY open NY close low high

USD/JPY 121.46 122.02 -0.56 121.38 122.52
EUR/USD 0.8989 0.8933 0.0056 0.8925 0.8995
EUR/JPY 109.17 108.95 0.22 108.99 109.46
GBP/USD 1.4231 1.4232 -0.0001 1.4210 1.4270
USD/CHF 1.6835 1.6937 -0.0102 1.6821 1.6954
USD/CAD 1.5377 1.5392 -0.0015 1.5371 1.5400
AUD/USD 0.5185 0.5133 0.0052 0.5135 0.5186

USD/JPY slipped to a 4-day low of 121.38 despite the fact that the Nikkei slumped to a 16 1/2-year low of 11,417.70 and that Japan's June current account balance was in surplus by 771.2 billion yen, down 40.5% on year. However, with the USD weak across the board and with the Bank of Japan under pressure to ease by Tuesday, the pair remained under selling pressure.
The outlook mixed between 2 Gann 50-point pivots at 121.05 and at 122.50.

Support: 121.38 (overnight low), 121.35 (Aug. 9 trough), 121.05 (Gann 50-point pivot; targets: 120.55/121.55).
Resistance: 122.50 (Gann 50-point pivot; targets: 122.00/123.00), 122.52 (overnight high), 123.03 (60-day moving average), 123.08 (100-day moving average), 123.66 (20-day moving average), 124.00 (Gann 50-point pivot; targets: 123.50/ 124.50).

Increasingly confident that the pair had bottomed out on July 6, traders vaulted EUR/USD to a new 3-month high of 0.8995 after smashing resistance of a channel line at 0.8958. The market ignored news that German retail sales stagnated in the first half-year in real terms, falling 0.1% compared with the same period a year ago, while in nominal terms sales rose 1.7%. In June alone, retail sales were up a real 0.5% on the year, or 3.1% in nominal price terms.
The outlook is slightly bullish, with traders pondering whether the 0.9000 level is defended by options players.

Support: 0.8963 (50% Fibonacci retracement level of the June-October downtrend), 0.8925 (overnight low), 0.8902 (200-day moving average), 0.8848 (61.8% Fibonacci retracement level of the Nov. 27-Jan. 5 uptrend), 0.8790 (38.2% Fibonacci retracement level of the June-October downtrend; 20-day moving average).
Resistance: 0.8995 (overnight high; 3-month high), 0.9091 (April 5 high), 0.9136 (61.8% Fibonacci retracement level of the June-October downtrend).

EUR/JPY posted marginal gains within Friday's range. While the outlook is neutral, the cross currency remains in a rising channel.

Support: 108.99 (overnight low), 108.69 (20-day moving average), 107.43 (100-day moving average), 106.05 (60-day moving average), 106.00 (200-day moving average).
Resistance: 109.46 (overnight high), 110.15 (Aug 2 high; 3-month peak), 111.02 (50% Fibonacci retracement level of May 1999-October 2000 downtrend).

GBP/USD recouped losses that saw it as low as a 4-day low of 1.4210 in mid-morning Europe trading. The pair benefited from the support of both the 20-day and 100-day moving average at 1.4231 and at 1.4206, respectively.
The outlook is mixed.

Support: 1.4231 (20-day moving average), 1.4210 (overnight low), 1.4206 (100-day moving average), 1.4127 (60-day moving average), 1.3911 (June 20 low), 1.3688 (June 12 low; 15 1/2-year low), 1.3660 (February 1986 trough).
Resistance: 1.4270 (overnight high), 1.4353 (Aug. 2 high; 2 1/2-month peak), 1.4414 (May 21 peak).

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