[IMAGE] Forums Discuss these points in the Forums:  Forexnews Forum       Technicals Live Charts Analysis available from: Cornelius Luca   J.P. Chorek   Technical Research Ltd.   Charts & News featuring Standard & Poor's        Interest Rates  US: Japan: Eurozone: UK: Switzerland:   1.75%  0.15%  3.25%  4.0%  1.25-2.25%        [IMAGE]   	 [IMAGE]  FX Market Sees Green Light to Sell Yen January 22, 7:00 AM: EUR/$..0.8835 $/JPY..134.15 GBP/$..1.4270 $/CHF..1.6625  FX Market Sees Green Light to Sell Yen by Jes Black  At 10:00:00 AM US Dec Leading Indic. (exp 0.7%, prev 0.5%) At 2:00:00 PM US Dec Fed. Budget (exp 24 bln, prev -54.3 bln)  The yen crumbled to a new 3-year low of 134.33 after US Treasury Secretary O'Neill refused to engage in a "weak yen" debate but agreed that markets should set FX rates. Traders feared O'Neill would show some apprehension as to the yen's sharp slide. Instead, his remarks were seen as still backing the strong dollar policy and taken implicitly that the yen should be allowed to fall. However, O'Neill also pointed out that a competitive devaluation would not fix Japan's non-performing loan problem or improve productivity. Moreover, the US is only likely to support yen weakness if it means Japan forces banks to dump bad loans, accelerates structural reforms and deregulates the markets, like the US has done.  Yet tolerance of a weaker yen is seen giving traders the green light to sell it towards 135 in the near term. USD/JPY rose as high as 134.33 and if the pair can hold above 134.00, technically, the dollar will target 135.00 in the near term. Support is seen at 133.80 followed by 133.30 and 132.80. EUR/JPY also hit a fresh 1-week high of 118.73 after hitting a 7-day low of 115.55 last Tuesday. Support is seen at 118.12, which marks the 61.8% retracement from the January 2 high of 119.71 to last week's low of 115.55. Follow up support is seen around 117.40, 116.50 and 116.00.   The euro/yen cross was bolstered by gains in dollar/yen but the euro continued to show weakness against the dollar after again failing to break resistance at 88.50. EUR/USD rose to a session high of 88.52 but quickly pared those gains and fell back to 88.35. Support is seen at 88.15 followed by 87.90 and key support at 87.50, which marks the 31.8% Fibonacci retracement of the move from 82.25 to 95.96. Resistance is seen at 88.50 followed by 89.10, which marks the 50% Fibonacci retracement of the same move. Yet, only a move back above 89.50 would give any hope of a near term recovery as temporary moves higher are not seen by the market as indicating strength given the euro's difficulty to remain above 90-cents.  Limiting the euro's losses to the dollar were strong gains against the pound following overnight comments from Bank of England Director for Europe, John Townend, who said the pound was clearly overvalued against the euro and would almost certainly need to weaken if the UK were to join the EMU. EUR/GBP rose half a pence to a day's high of 61.90.  However, any artificial lowering of the rate would step up inflationary pressures for the U.K., cautioned Townend, who would like to see EUR/GBP rise, but sterling remain stable vs the dollar. Townend also noted that the U.K. government wont likely assess joining the euro until June 2003.  GBP/USD fell through support at 1.4330 and 1.4300 to a 5-day low of 1.4278. Cable support is now seen at 1.4270, the 61.8% retracement of the move from 1.4060 to 1.4606. Resistance is seen at 1.4300, 1.4330, 1.4350.  For the US session today, earnings will be the focus after traders return from a 3 day weekend. The markets will have to assess over 500 company earnings reports this week, with nearly one in three companies on the S?500 scheduled to report on Tuesday alone. Again, Wall Street is likely to pay more attention to the foreward outlook after already pricing in dismal Q4 figures. Companies due to report are Merck, Motorola, Amazon, Merrill Lynch, Johnson & Johnson, Boeing and Lucent.  Today's key economic data is the leading indicators index for December, which is expected to rise 0.7% after it surprised on the upside last month with a 0.5% gain.  The other main event this week is Fed Chairman Greenspan's speech before the Senate Budget Committee on Thursday. Market sentiment now believes Greenspan probably sounded more pessimistic than he intended in his speech on January 11. Therefore, the market is anticipating a more upbeat tone tomorrow about prospects for economic recovery. Interest rate futures are pricing in less than a 30% chance of a rate cut at the Jan 30 meeting, leaving the majority to believe rates will hold steady at 1.75%, a 40-year low. However, since the dollar index is trading near 6-month highs, most dealers are now divided over whether a further rate cut would help the dollar.     	[IMAGE] Audio Mkt. Analysis Quiet Market Awaits Data, USD Talk        Articles & Ideas  Philly Fed-Supported Optimism   EUR/USD: Technical Analysis       Articles & Ideas Forex Glossary   Economic Indicators   Forex Guides   Link Library      [IMAGE]  	
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