Cornelius Luca //
New York, Aug. 16 (BridgeNews) - The badly bruised greenback trimmed losses that culminated overnight versus the major European currencies as traders realized profits on some of their short dollar positions. Traders will watch the July consumer price index and July housing starts for clues on whether the Federal Reserve can go ahead and cut interest rates next week to boost the domestic economy. The market sentiment remains bearish on the dollar after hitting five-month lows against the euro, sterling and the Swiss franc.

Euro/dollar peaked at a five-month high of 0.9203, sterling/dollar climbed to a five-month high of 1.4517 and dollar/Swiss franc mirrored with a decline to a five-month low of 1.6530. Dollar/yen consolidated within an inside range after falling Wednesday to a two-month low of 119.05, while dollar/Canada trimmed losses after dipping to a 10-day low of 1.5253.
The dollar is expected to edge higher on short covering.

Current Previous Change Global Global
NY open NY close low high

USD/JPY 119.90 119.55 0.35 119.28 120.29
EUR/USD 0.9144 0.9146 -0.0002 0.9131 0.9203
EUR/JPY 109.63 109.40 0.23 108.85 109.99
GBP/USD 1.4445 1.4400 0.0045 1.4401 1.4517
USD/CHF 1.6616 1.6604 0.0012 1.6530 1.6630
USD/CAD 1.5269 1.5272 -0.0003 1.5253 1.5291
AUD/USD 0.5266 0.5289 -0.0023 0.5268 0.5312

Traders ignored Japanese officials comments on FX:
Vice Finance Minister for International Affairs Haruhiko Kuroda reportedly said that the yen's strength now does not reflect fundamentals, so the ministry will take appropriate steps as needed and closely watch the market situation.
The ministry's International Bureau Chief Zenbei Mizoguchi then warned that the yen's current level didn't reflect Japan's fundamentals and hinted that the ministry would take appropriate action if necessary.
But Bank of Japan Governor Masaru Hayami said that it is not necessary for the BOJ to mull purchases of FX as part of monetary policy at this time, and the BOJ is not considering intervention in the FX market for the purpose of guiding the yen in any direction. Hayami added though that he is concerned about developments in the Japanese stock and FX markets.
On the largely ignored fundamentals front, Japan's second preliminary real GDP for the first quarter rose 0.1% on the quarter, or an annualized 0.5%, compared with the 0.2% drop, or annualized 0.8% fall, indicated in the first preliminary data, the Cabinet Office announced. The upward revisions were mainly caused by changes in personal consumption.
Japan's index of leading indicators was also revised up to 40.0 in June from a preliminary 37.5. The leading index was below the critical 50.0 "boom-or-bust" level, after it had been above that level in May.
The intraday outlook is mildly bullish, after the pair remained Wednesday above the key 119.00, 38.2% Fibonacci retracement level of the August 1998-December 1999 downtrend.

Support: 119.28 (overnight low), 119.05 (Aug. 15 low; 2-month low), 119.00 (38.2% Fibonacci retracement level of the August 1998-December 1999 downtrend), 118.30 (June 1 low; 3-month low), 118.25 (Gann 50-point pivot; targets: 117.75/118.75).
Resistance: 120.29 (overnight high), 121.05 (Gann 50-point pivot; targets: 120.55/121.55), 122.50 (Gann 50-point pivot; targets: 122.00/123.00), 123.01 (60-day moving average), 123.02 (100-day moving average), 123.16 (20-day moving average).

EUR/USD gave back all of its overnight gains on profit taking after peaking at a 5-month high of 0.9203. But the pair found intraday support at 0.9136 from the 61.8% Fibonacci retracement level of the June-October downtrend.
The market paid scant attention to ongoing weak euro-zone data. The German economy came to a halt in the Q2 compared to the Q1 year, the Bundesbank estimated in a report published Thursday. Year-on-year, the economy grew by just 1% in the Q2, the report added. This compared with 2% a year-on-year increase in gross domestic product in the Q1 of 2001.
The outlook is mixed.

Support: 0.9136 (61.8% Fibonacci retracement level of the June-October downtrend), 0.9131 (overnight low), 0.8963 (50% Fibonacci retracement level of the June-October downtrend), 0.8910 (200-day moving average), 0.8853 (20-day moving average).
Resistance: 0.9203 (overnight high; 5-month high), 0.9382 (March 2 peak), 0.9446 (Feb. 1 peak), 0.9595 (Jan. 5 high; six-month peak).

EUR/JPY marked time within Wednesday's range as the cross currency consolidated mostly above the rising 20-day moving average at 109.00 and within a rising channel.
The outlook is neutral.

Support: 109.00 (20-day moving average), 108.85 (overnight low), 107.46 (100-day moving average), 106.34 (60-day moving average), 105.80 (38.2% Fibonacci retracement level of May 1999-October 2000 downtrend), 106.26 (200-day moving average), 104.54 (June 20 low).
Resistance: 109.99 (overnight high), 110.48 (Aug 14 high; 3 1/2-month peak), 111.02 (50% Fibonacci retracement level of May 1999-October 2000 downtrend).

GBP/USD trimmed gains on profit talking after climbing to a 5-month high of 1.4517. Traders ignored the positive U.K. fundamentals, which showed retail sales growth picking up again in July, after a flat monthly performance in June. Sales volumes rose 0.6% on month and 6.0% on year, in line with analyst expectations.
The outlook is mixed.

Support: 1.4401 (overnight low), 1.4262 (20-day moving average), 1.4208 (100-day moving average), 1.4136 (60-day moving average), 1.3911 (June 20 low).
Resistance: 1.4517 (overnight high; 5-month peak), 1.4560 (61.8% Fibonacci retracement of January-June downtrend), 1.4756 (March 2 peak), 1.5100 (Jan. 8 peak, year high).