[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]  USD Steady Ahead of Data Barage and Bush  January 29, 7:00 AM: EUR/$..0.8609 $/JPY..133.35 GBP/$..1.4118 $/CHF..1.7089  USD Steady Ahead of Data Barage and Bush by Jes Black  At 8:30:00 AM US Dec Durable Goods (exp 0.9%, prev -4.8%) US Dec Ex defence (exp 1.5%, prev 2.4%) At 9:40:00 AM US Redbook (exp n/f, prev 1.4%) At 10:00:00 AM US Jan Consumer Confidence (exp 95.4, prev 93.7) At 9:00 PM President Bush State of Union Address   The dollar took a breather today before a multitude of economic data get underway and the market braces for the State of the Union address by President Bush. The sharp rise in the dollar against the European majors over the past few trading sessions is based on the belief that this week's US data will show continued improvement. Moreover, President Bush's speech is expected to reflect a bullish outlook on the US economy. This has kept the dollar index hovering near the 120 level today, just shy of its 15-year highs around 121.00.  EUR/USD fell to a day's low of 85.93 in European trade following a failed attempt to break key resistance at 86.35. The single currency now looks vulnerable to fall back below 86.00 on its way to yesterday's 6-month low of 85.72. A break below this would then target 85.55, the 71.8% Fibonacci retracement of the move from 82.25 to 95.95. However, choppy trade over the next few days is likely and the market does not see temporary moves higher as indicating strength. Resistance is viewed at 86.35, 86.50, and the key 87.40/50 level which marks the 61.8% Fibonacci retracement of the same move.  In a newspaper interview published Tuesday, the ECB's Issing said most studies indicate that the euro is undervalued. However, Issing conceded that the central bank may have underestimated the impact of the US slowdown on the Eurozone economy. In the near term, Q1-Q2 2002 growth is likely to be flat growth and that the euro FX rate will be dependent on progress with EU reforms, which have been slow to make much headway, Issing said.  But holding back the dollar for the moment is the fact that much hope has again been pinned on hopes of a speedy US recovery. Therefore, not only will this week's economic data have to impress, but all eyes will be on the Fed's FOMC meeting which convenes on Wednesday. A strong majority expects the Fed to stay put on rates. But the focus will be on their outlook for the economy and whether they change the easing bias to neutral after an incredible 11 interest rate cuts last year to a 40-year low of 1.75%.   Another point of contention this week will be whether the G7 meeting in Toronto and the World Economic Forum in New York become a sounding board for big global interests to bash the recent resurgence in the dollar. Manufacturers are likely to complain that the state of the economy is now about at the same level just prior to the September 11 attacks, but the USD index is again trading near 15-year highs.  In fact, recent dollar strength gave way to corrective yen buying on Monday as USD/JPY fell 1.5% from its recent 40-month highs around 134.90. The euro and pound crosses fared worse and have fallen 3.75% and 2.5% respectively, since peaking at 2-year highs last Thursday.   BoJ Governor Hayami helped push the yen higher following a break in the usual weak yen rhetoric by MoF officials. Hayami reiterated his opposition to a weaker yen, arguing that a softer currency is not a solution to Japan's problems and that manipulating the yen lower would undermine Japan's credibility. However, Hayami's comments are not seen as carrying that much weight because it is widely known that the MoF conducts FX policy, not the BoJ.  Nevertheless, given the rapid fall in JPY over the past 2 months and the subsequent consolidation, some dealers warn of further corrective buying in the yen before a renewed fall will push JPY below recent lows. Some dealers expect a reversal in USD/JPY back as far as the 130 mark. But before that happens, current support at 132.80 and 132.40 will have to give. Meanwhile, the upside is capped at 134.00, 134.50, and 134.90.  Despite any technical correction in the JPY bear trend, the currency is more likely to succumb to its weak economic fundamentals. Today, Japan's unemployment rate climbed to a record high for the fourth straight month in December to 5.6%, up from 5.5%. It was the highest rate since unemployment records began in 1953. Separate data showed average spending down 4.4% in December from a year earlier. Moreover, GDP is expected to contract by 1% in this fiscal year (ending in March) and the government has forecast 0% growth for FY2002.  GBP broke out of today's tight trading range and fell to new day lows against the dollar and yen. GBP/JPY is now testing support around one-month lows of 187.00. Sterling has now dropped over 2.5% against the yen since last Thursday's 2-year highs around 192.20. GBP/USD also fell to a day's low of 1.4045, just above overnight 6-month lows of 1.4043. Support is seen here, followed by 1.3980 and 1.3930.  Finally, today's key data is the Conference Board's Consumer Confidence survey which is expected to rise to 95.4, from 93.7 in Decmeber. However, because it is scheduled one day before the FOMC decision on interest rates, the markets reaction is likely to be muted. Durable goods orders are also expected to rise by 0.9% in December after falling 4.8% previously. But inventory depletion is unlikely to lead to a sharp recovery.rd high for the fourth straight month in December to 5.6%, up from 5.5%. It was the highest rate since unemployment records began in 1953. Separate data showed average spending down 4.4% in December from a year earlier. Moreover, GDP is expected to contract by 1% in this fiscal year (ending in March) and the government has forecast 0% growth for FY2002.  On Monday, the Japanese government said that consumer sentiment remained weak in December amid rising corporate bankruptcies and record high unemployment. Deflationary pressure also persists as retail sales in Japan fell 5.7% from a year earlier in December for the ninth straight month of decline, showing how falling incomes and are weighing on spending as consumers become more uncertain about the economic outlook.  JPY is also likely to remain under pressure in the near term as ratings downgrades and rising bond yields steer investors away from Japanese assets. The Bank of International Settlements said Monday the outstanding balance of overseas loans and investment by Japanese banks was up some $40 billion from the end of June. Moreover, banks are unloading Japanese bonds in order to book profits before the fiscal year ends on March 31. Foreign investors have also sold bonds as the falling yen has created a currency risk too great for the scant return of Japanese bonds.  USD/CHF also remained above support at 1.7020 which is key for further gains. Follow up support stands at 1.6945, which marks the 50% Fibonacci retracement of the same move. On Monday, Swissy rose above resistance at 1.7075 to a new 5-month high of 1.7173. Swissy is now seen targeting 1.7245, which marks the 61.8% Fibonacci retracement of last year's July high of 1.8221 to the September low of 1.5670.  	[IMAGE] Audio Mkt. Analysis USD Retreats Ahead of Data Flood       Articles & Ideas  How Will the Dollar Fare Amid the Data Barrage?   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