Cornelius Luca //
New York, Aug. 6 (BridgeNews) - The U.S. dollar looks poised to erase some of its losses from last week after bottoming out Friday versus its major counterparts. Traders will be searching for new leads and the euro zone and Japanese economic data, which are expected to offer new evidence of regional economic weakness, might be the needed trigger.

Weighed by poor economic figures and profit taking, euro/dollar slipped within an inside range after hitting Friday a 2 1/2-month high of 0.8875. Sterling/dollar followed suit with a decline to a 12-day low of 1.4218, while dollar/Swiss franc edged higher within the previous day's range. Dollar/yen also opens in the positive territory, but with no short-term optimism on the Japanese economy, the pair should extend its consolidation around the 124.00 Gann 50-point pivot. Dollar/Canada will continue to unfold its swerves between 1.5251 and 1.5416 before traders can identify new leads.
The market will focus Monday on the July Challenger monthly layoff report to see if it echoes Friday's better-than-expected U.S. labor market report.

Current Previous Change Global Global
NY open NY close low high

USD/JPY 123.91 123.65 0.26 123.64 124.27
EUR/USD 0.8805 0.8840 -0.0035 0.8789 0.8846
EUR/JPY 109.10 109.33 -0.23 108.86 109.43
GBP/USD 1.4212 1.4284 -0.0072 1.4218 1.4295
USD/CHF 1.7123 1.7055 0.0068 1.7063 1.7149
USD/CAD 1.5290 1.5290 0.0000 1.5295 1.5304
AUD/USD 0.5161 0.5166 -0.0005 0.5159 0.5172

USD/JPY's initial rebound was helped by Prime Minister Junichiro Koizumi's comment that he does not believe that it is appropriate to change currency rates as a policy means. The upside was extended by Moody's Investors Service, which has downgraded the bank financial strength rating of Bank of Tokyo Mitsubishi to D from D+, reflecting the bank's declining financial flexibility, according to dealers. Buy-stops were triggered in the 124.15-20 area.
But the rally was resisted by the 20-day moving average at 124.22, and the pair pulled back toward the key 124.00 Gann 50-point pivot, which targets 123.50 and 124.50.
Japan's index of leading indicators, which shows economic conditions 2-6 months ahead, fell to 37.5 in June, compared with a revised 70.0 in May, the Economic and Social Research Institute at the Cabinet Office said. Also, the index of coincident indicators, which roughly shows current economic conditions, stood at 31.3 in June, compared with 30.0 in May. If the leading index stays above 50.0 for 3 consecutive months, the economy usually enters an expansion phase within the following 3 months, economists here said.
Japan had a 179.653-billion-yen trade surplus on a custom-cleared basis in the first 20 days of July, down 67.2% on the year, the Ministry of Finance announced. The data confirm weakness in overseas demand and indicate the trade surplus for July 1-31, to be released in mid-August, may show a fall on the year, resulting in declines for 13th straight months.
The intraday outlook is neutral.

Support: 123.64 (overnight low), 123.08 (60-day moving average), 122.70 (July 20 trough), 122.50 (Gann 50-point pivot; targets: 122.00/123.00), 121.05 (Gann 50-point pivot; targets: 120.55/121.55).
Resistance: 124.00 (Gann 50-point pivot; targets: 123.50/124.50), 124.22 (20-day moving average), 124.27 (overnight high), 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), 127.00 (Gann 50-point pivot; targets: 126.50/127.50).

One day after peaking at a 2 1/2-month high of 0.8875 and registering a doji bearish reversal pattern on the candlestick chart, EUR/USD came under profit-taking selling pressure.
Its intraday slump was accelerated by poor economic data.
German manufacturing orders fell 2.5% in June compared to +4.6% in May. A BridgeNews/Fokus Deutschland survey of economists forecast June manufacturing orders down 0.2% from May. In addition, Bert Ruerup, one of five academics comprising the 'wise men' advisory panel to the government, said German economic expansion this year at around 1.4% will be below government expectations and unemployment is expected to post a seasonally adjusted increase of 20,000 when July data is released Tuesday. He also said 1.4% real GDP represented the latest forecast by the group, but that he believed it to be on the optimistic side. The intraday outlook is slightly bearish, with the range bordered at 0.8790 by the 38.2% Fibonacci retracement level of the June-October downtrend and at 0.8848 by the 61.8% Fibonacci retracement level of the Nov. 27-Jan. 5 uptrend.

Support: 0.8790 (38.2% Fibonacci retracement level of the June-October downtrend), 0.8789 (overnight low), 0.8705 (20-day moving average), 0.8350 (July 6 low; 7-month low).
Resistance: 0.8846 (overnight high), 0.8848 (61.8% Fibonacci retracement level of the Nov. 27-Jan. 5 uptrend), 0.8875 (Aug. 3 high; 2 1/2-month high), 0.8895 (200-day moving average).

EUR/JPY fell within its Friday's range in tandem with EUR/USD. While its intraday outlook is neutral, the cross currency remains within a rising channel.

Support: 108.86 (overnight low), 108.15 (20-day moving average), 107.49 (100-day moving average), 106.01 (60-day moving average), 105.80 (38.2% Fibonacci retracement level of May 1999-October 2000 downtrend), 105.59 (200-day moving average), 104.54 (June 20 low).
Resistance: 109.43 (overnight high), 110.15 (Aug 2 high; 3-month peak), 111.02 (50% Fibonacci retracement level of May 1999-October 2000 downtrend).

With EUR/GBP benefiting from intraday demand, GBP/USD declined to a 12-day low of 1.4218. Sell-stops were triggered at 1.4245. The pair didn't profit from the positive U.K. data.
Manufacturing output rose an unexpected 0.3% in June for the first time this year but the quarterly rate is still the weakest for a decade. Analysts had predicted a fall of around 0.2% on the month and a fall of 2.1% on the year. U.K. manufacturing has been hit by the global collapse in demand for technology equipment and the strength of sterling.
The outlook is slightly bearish. If it manages to stay above the 100-day moving average at 1.4211, GBP/USD might rise on short covering.

Support: 1.4220 (overnight low), 1.4211 (100-day moving average), 1.4138 (60-day moving average), 1.4196 (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: 1.4295 (overnight high), 1.4353 (Aug. 2 high; 2 1/2-month peak), 1.4414 (May 21 peak).