By Cornelius Luca
New York, Aug. 17 (BridgeNews) - The euro opens on a positive note following below forecast euro-zone July inflation and firm French job creation and industrial output. But, just like the sterling and the Swiss franc, the 12-nation currency remained stuck within its Thursday's range versus the dollar, as traders focused on position squaring ahead of the weekend and on the June U.S. trade deficit.

Dollar/yen extended its Thursday's rebound on short covering after Japan's Vice Finance Minister for International Affairs Haruhiko Kuroda attempted to verbally devalue the yen by saying that the current foreign exchange market does not appear to reflect economic fundamentals. A weaker currency would ease Government's efforts to boost the stagnant Japanese economy. But dollar/yen remained within Wednesday's range, when it slumped to a two-month low of 119.05, and only a climb above the 121.05 Gann 50-point pivot would attract more demand.
Dollar/Canada traded within recent ranges as the market searched for new leads. Overall, the dollar should benefit Friday from short covering.

Current Previous Change Global Global
NY open NY close low high

USD/JPY 120.79 120.38 0.41 120.07 120.81
EUR/USD 0.9138 0.9123 0.0015 0.9103 0.9163
EUR/JPY 110.39 109.80 0.59 109.53 110.55
GBP/USD 1.4436 1.4450 -0.0014 1.4417 1.4463
USD/CHF 1.6620 1.6661 -0.0041 1.6584 1.6680
USD/CAD 1.5358 1.5378 -0.0020 1.5271 1.5387
AUD/USD 0.5340 0.5241 0.0099 0.5240 0.5352

USD/JPY's rise to a 2-day high of 120.81 was due mostly to short covering in a thin market, rather than to MOF Kuroda's threat that the ministry would take appropriate FX actions if necessary. With the pair around the long-term equilibrium level of 120, there is little reason to even contemplate, let alone implement, an intervention. However, with the current Japanese government seemingly engaged fully in restructuring its ailing and slightly outdated economy, every bit helps. A yen devaluation would alleviate the pressure of actually making structural changes, which conservative elements oppose.
In other news, Bank of Japan board members discussed the introduction of an inflation targeting policy, although many members shared the view that it is not appropriate to adopt an inflation targeting policy right now, according to the minutes of the July 12-13 meeting released by BOJ. The minutes noted that one member emphasized the need for the BOJ to actively consider introducing it.
The outlook is slightly bullish, with all eyes on the key 121.05 Gann 50-point pivot that targets 120.55 and 121.55.

Support: 120.07 (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: 120.81 (overnight high), 121.05 (Gann 50-point pivot; targets: 120.55/121.55), 122.50 (Gann 50-point pivot; targets: 122.00/123.00), 122.97 (100-day moving average), 123.02 (60-day moving average), 123.07 (20-day moving average).

EUR/USD edged higher within Thursday's range and will likely consolidate further around the 61.8% Fibonacci retracement level of the June-October downtrend at 0.9136.
Just like the U.S. inflation, the annual rate of euro-zone inflation declined for the second month in succession in July, coming in at 2.8. The figure was influenced by a sharp fall in the annual rate of energy inflation, which was 2.9%, compared with 5.5% in June and 13.4% in July 2000. However, the figure remains above the 2.0% ECB target.
France's job creation growth remained robust in the second quarter, although it slowed from the first quarter. The country's private sector created 63,900 new jobs in the second quarter, a 0.4% rise on quarter and 3.0% rise on year. In addition, French industrial output rose a monthly 0.3% in June as production quickened in the energy, consumer goods and automobile sectors.
The outlook is mixed.

Support: 0.9136 (61.8% Fibonacci retracement level of the June-October downtrend), 0.9103 (overnight low), 0.8963 (50% Fibonacci retracement level of the June-October downtrend), 0.8912 (200-day moving average), 0.8873 (20-day moving average).
Resistance: 0.9163 (overnight high), 0.9203 (Aug. 16 high; 5-month high), 0.9382 (March 2 peak), 0.9446 (Feb. 1 peak).

EUR/JPY rose to a new 3 1/2-month high of 110.55 as both of its components rose. Next resistance is pegged to 111.02, the 50% Fibonacci retracement level of the May 1999-October 2000 downtrend.
The outlook is slightly bullish.

Support: 109.53 (overnight low), 109.17 (20-day moving average), 107.45 (100-day moving average), 106.45 (60-day moving average), 106.35 (200-day moving average), 105.80 (38.2% Fibonacci retracement level of May 1999-October 2000 downtrend), 104.54 (June 20 low).
Resistance: 110.55 (overnight high; 3 1/2-month peak), 111.02 (50% Fibonacci retracement level of May 1999-October 2000 downtrend).

One day after climbing to a 5-month high of 1.4517, GBP/USD marked time within an inside range. The intraday outlook is neutral.

Support: 1.4417 (overnight low), 1.4271 (20-day moving average), 1.4211 (100-day moving average), 1.4140 (60-day moving average), 1.3911 (June 20 low).
Resistance: 1.4463 (overnight high), 1.4517 (Aug.16 high; 5-month peak), 1.4560 (61.8% Fibonacci retracement of January-June downtrend), 1.4756 (March 2 peak).