29 August 2001, 20:31  US FX Daily Outlook: GDP data provides slight dollar support

Jim Cote
Chicago, August 29 (BridgeNews) - The dollar firmed slightly as U.S. gross domestic product managed a gain at a seasonally adjusted annual rate of just 0.2%, the Commerce Department reported Wednesday. Yen traders are focused instead on the battle between the 119 and 120 figures where knock-out options are said to exist. The euro was already weak but slipped a little futrther in response to the GDP data.

Current Previous Change Global Global
NY open NY close low high

USD/JPY 119.40 120.02 -0.62 119.35 120.10
EUR/USD 0.9111 0.9122 -0.0011 0.9102 0.9150
EUR/JPY 108.81 109.51 -0.70 108.78 109.66
GBP/USD 1.4528 1.4527 0.0001 1.4513 1.4569
USD/CHF 1.6655 1.6630 0.0025 1.6586 1.6668
USD/CAD 1.5404 1.5388 0.0016 1.5382 1.5412
AUD/USD 0.5289 0.5300 -0.0011 0.5285 0.5317

USD/JPY drifted to an overnight low of 119.76 as short-term players were squeezed out. A larger number of knock-out options with 119.00 strikes are said to be in the market.
BOJ Governor Hayami said that stable FX moves which reflect fundamentals are desirable, and that the view that the central bank allows deflation is a misunderstanding.
The Nikkei Shimbum reported that Japanese Prime Minister Koizumi has decided on a 2 trillion to 3 trillion JPY supplementary budget for fiscal year 2001.
The Japanese stock market continued to fall Wednesday, with the Nikkei 225 Stock Average breaking the psychologically important 11,000 level for the first time since October 1984 on broad-based selling pressure after steep falls on Wall Street overnight. Banking shares, in particular, were hit by media reports of the government's new plans to resolve bad loans. The Nikkei 225 Stock Average closed down 209.64 points, or 1.9%, at 10,979.76. BridgeNews
The outlook is bearish.

Support: 119.35 (overnight low), 119.65 (Gann 50-point pivot; targets: 119.15/120.15), 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: 120.10 (overnight high), 121.05 (Gann 50-point pivot; targets: 120.55/121.55), 122.50 (Gann 50-point pivot; targets: 122.00/123.00), 122.54 (100-day moving average), 123.00 (60-day moving average), 121.32 (20-day moving average), 124.00 (Gann 50-point pivot; targets: 123.50/124.50), 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 upside should be limited by diminishing hopes that the ECB will cut interest rates Thursday.
EUR/USD continued to swerve around the 61.8% Fibonacci retracement level of the June-October downtrend at 0.9136, but its subdued behavior is only the calm before the storm. Key levels to watch Wednesday are 0.9240, the 5-month high reached on Aug. 22, and 0.9028, the previous low. The pair managed to stay above the rising 20-day moving average, currently at 0.9025, thus enhancing its upside bias.
Italian preliminary August CPI was unchanged from last month to give a 2.8% year-on-year rise, in line with cities data released earlier in the month. Euro-zone June trade data may be released during the day while the Conference Board's German leading and coincident indicators for July are due at 1330 GMT.
The outlook is bearish.

Support: 0.9114 (overnight low), 0.9136 (61.8% Fibonacci retracement level of the June-October downtrend), 0.9080 (Aug. 21 low), 0.8963 (50% Fibonacci retracement level of the June-October downtrend), 0.9023 (20-day moving average).
Resistance: 0.9150 (overnight high), 0.9240 (Aug. 22 high; 5-month high), 0.9382 (March 2 peak), 0.9446 (Feb. 1 peak), 0.9595 (Jan. 5 high; six-month peak).

EUR/JPY continued to decline on euro weakness.
The outlook is bearish.

Support: 108.83 (overnight low), 109.47 (20-day moving average), 107.44 (60-day moving average), 105.80 (38.2% Fibonacci retracement level of May 1999-October 2000 downtrend), 104.54 (June 20 low).
Resistance: 109.66 (overnight high), 110.63 (Aug 20 high; 3 1/2-month peak), 111.02 (50% Fibonacci retracement level of May 1999-October 2000 downtrend), 113.71 (April 4 high; 17-month high).

GBP/USD gains are limited by the euro weakness.
The outlook is bearish.

Support: 1.4513 (overnight low), 1.4362 (20-day moving average), 1.4223 (100-day moving average), 1.4183 (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: 1.4569 (overnight high), 1.4560 (61.8% Fibonacci retracement of January-June downtrend), 1.4584 (Aug. 22 high; 5-month high), 1.4756 (March 2 peak), 1.5100 (Jan. 8 peak, year high).

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