[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:   2.5%  0.15%  3.75%  4.5%  1.75-2.75%       [IMAGE] 	 [IMAGE]  Dollar Edges Higher Ahead of ECB Rate Announcement  October 25, 7:00 AM: EUR/$..0.89111 $/JPY..123.20 GBP/$..1.4257 $/CHF..1.6595  Dollar Edges Higher Ahead of ECB Rate Announcement by Jes Black  ECB rate announcement at 7:45 AM At 8:30:00 AM US Sept Durable Goods orders m/m (exp -1.4%, prev 0.0%) US Q3 Employ. Cost Index (exp 0.9%, prev 0.9%) US Sept Ex Defense m/m (exp n/f, prev 0.4%) US Jobless Claims (exp 480k, prev 490k) At 10:00:00 AM US Sept Existing Home Sales (exp 5.2 mln, prev 5.5mln) US Sept Help Wanted Index (exp n/a, prev 53)  The dollar gained an upper hand in European trade, muscling its way to a fresh 2-month high of 123.36 yen, but failed to break technical resistance around 123.30. A growing sense of dismay with the Japanese outlook prompted traders to poor back into USD/JPY after it fell back to support around 122.40 overnight. The dollar's ability to maintain above 122.00 gave off a strong buy signal, and a break of 123.30 would open the way for a further rally towards 123.70 before 124.30, dealers say. EUR/USD also fell from session highs around 89.40 against the broadly stronger dollar. However, major currencies traded in tight ranges ahead of the key European Central Bank meeting at 7:45 AM. Whether or not they do cut rates today is uncertain and the ECB is well know for wrong-footing the market.  The euro showed little reaction to today's data from the Eurozone as most dealers took to the sidelines ahead of today's ECB meeting. EUR/USD was unchanged after Italian consumer confidence rose in October because the raw data also pointed to a worsening in sentiment following the U.S.-led attacks on Afghanistan. ISAE said in its monthly report that the adjusted index rose to 124.3 this month from 121.2 in September, with confidence particularly strong on prospects for saving. However, ISAE said in a statement that "unfavourable expectations are emerging on the general economic situation, on unemployment and on intentions to purchase durables". In the week following the start of the U.S. retaliatory strikes against Afghanistan, which began on October 7, the unadjusted index fell to 118.3. "That contraction seems to mirror even greater pessimism than that registered immediately after the World Trade Centre attack," ISAE said.   Meanwhile, benign German inflation data and dismal business confidence surveys in Italy and Germany raised hopes of a rate cut this week, but uncertainty still prevails. Preliminary data from Germany showed the national inflation rate drawing near to the ECB's 2.0% target. This confirms the downtrend, but it was also expected and may not be enough for the ECB to lower rates since Eurozone inflation for September stood at 2.4%.  The central bank last lowered its benchmark minimum bid rate by 50 basis points to 3.75 percent on September 17, its third easing of monetary policy this year. The rate cut was an effort to restore confidence following the September 11 attacks. A poll conducted by Reuters this week showed that out of 50 economists questioned, 27 now favor a rate cut. Last week, 21 of the same 50 backed a cut. The number expecting no change has also dropped to 18 from 27 last week, putting the chance of a rate cut at 52 percent, up from 48 percent last week.   The euro would likely rally from current levels around 89 cents if the ECB were to cut by 25 basis points. But because a 25 bp cut has already been priced into the market, the prospect for a sustained euro rally is not great. However, a more surprising 50 bp cut would trigger a substantial rise in the euro, possibly above the 90-cent figure. But given the current optimism surrounding the US economy, any gains are likely to be limited unless today's US data disappoints markets. Euro remains in position to test against support at the 50% Fibonacci retracement of 88.40. Current resistance holds at 89.40 if the ECB does not cut rates.  Following this mornings rate announcement by the ECB will be key US economic data which will give a markets a feel for the effect of the September 11 attacks on durable goods orders as well as this week's jobless claims figures. Durable goods orders are expected to show a sharp 1.4% decline in September from last month, bringing the yearly rate down to around  16% after stabilizing in July and August. Further declines are expected in the coming months as consumer and business investment remains poor. Meanwhile, jobless claims are expected to hover around 480 k for the October 20 work week. Home sales are expected to ease back in September after soaring in August and the effects from te attacks are not likely to be felt until later, housing analysts say.   GBP/USD further retrenched in European trade, falling to a session low of 1.4249 from overnight highs around 1.4300. Losses in EUR/USD as well as weakness against the euro weighed on the pound. On Wednesday, Sterling seesawed on a combination of weak economic data followed by supportive comments by UK Minister Peter Hain who said it would be wrong to join the euro at the present time because the UK was better positioned to endure an economic slowdown than Europe. Despite the remark, markets saw little reassurance in the earlier data, which showed business confidence among UK manufacturers plummeted to its lowest in three years in October. This prompted the CBI to call for a 50 bp cut from the Bank of England, the first time in three years the CBI has called for such a large rate cut. GBP/USD is now hovering near support at 1.4255 but the bearish trend is still intact after failing to regain the 1.43 level.  Dealers will also look to earnings reports for Q3. So far, over 3/4 of the companies reporting matched or exceeded projected earnings targets. Today's lineup before the bell are Dow Chemical, Goodyear, and World Com. Those reporting after the bell are Coca-Cola and JDS Uniphase. Both Dow and Nasdaq futures are in negative territory.    	[IMAGE] Audio Mkt. Analysis Euro Steadies Ahead of Thursday's ECB Meeting       Articles & Ideas  The US Dollar: Before and after the Crisis   EURO: German IFO Will Remind ECB to Build Growth       Articles & Ideas Forex Glossary   Economic Indicators   Forex Guides   Link Library      [IMAGE] 	
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