[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 Falls To Profit Taking But Remains Strong Into 2002  December 31, 7:00 AM: EUR/$..0.8841 $/JPY..131.34 GBP/$..1.4490 $/CHF..1.6710  USD Falls To Profit Taking But Remains Strong Into 2002 by Jes Black  At 9:00:00 AM US New York NAPM (exp n/f, prev 246.2)  Market participants kept the majors in tight ranges as European trade was little moved by a quiet London session. Eurozone countries were already on holiday and FX markets had no key economic data to react to today. Instead, the major topic in Europe is the long awaited introduction of the euro on January 1. Despite some apprehension about the introduction, EUR/USD traded slightly higher than Friday's close of 88.40. Meanwhile, dealers also kept a weary eye on the developments of Argentina's financial and now political crises as well as the stand-off between India and Pakistan over Kashmir.  US markets will be open today, but dealers say most trading will be position squaring ahead of the January 1st holiday. Traders are not likely to react to today's manufacturing data from the New York NAPM, but it will be watched for signs of improvement, as it will provide insight into Wednesday's US NAPM. This is expected to rise to 45.6 in December from 44.5 and will give markets some indication of whether there's a pickup going on in manufacturing, which has been in a slump the longest of all the sectors.   Then of Friday will be the all-important jobs report. December non-farm payrolls are expected to decline 131k from the previous decline 331k. This would be a marked improvement and a positive signal for the US economy, since last week's jobless claims undershot estimates for the fourth consecutive time, and marked the seventh time out of the last eight weeks for which it remained below the key 400k figure. Recall that jobless claims had surged above 500k in the aftermath of the September 11 attacks that halted business activity, and thus the retreat in the jobless claims bodes well for both consumer sentiment and the dollar. Despite falling claims, the unemployment rate is predicted to rise to 5.8% from 5.7% in November.  The yen hovered around 116.00 to the euro and 131.30 to the dollar, slightly higher than last week's new multi-year lows, but still under strong pressure after the dollar hit a three-year peak just above 132 yen last Thursday. JPY has fallen nearly 10 percent in the fourth quarter, but has pared some of its recent losses as the market took a break ahead of the New Year. Looking ahead, the rapid fall in the yen is expected to slow, as the market is now very long on USD/JPY. However, the currency will continue to be mired by pessimism about Japan's deflationary spiral, as well as the rise in Japanese unemployment to a record high of 5.5% in November. Meanwhile, a senior Finance Ministry official this morning denied a report in the Mainichi Shimbun that the MOF and BoJ set a target range for the yen's exchange rate between 120 and 140 yen per dollar. Instead, the official said that decisions to intervene were determined by the overall movements in the currency markets.  EUR/JPY maintained near a session high of 116.30, just below last week's 2-year high of 116.48. Strength in the euro against the yen contrasted with profit taking in USD/JPY and helped the euro against the dollar as it recovered from its Christmas Eve low of 87.40, on its way to a one-week high of 88.65 in Asian trade today. Yet, for EUR/USD to break its medium-term bear trend, it will need to close above resistance at 90.40 to show it can overcome the upper bound of the descending channel resistance of the fall from its September high of 93.26. A break under 88.30 would target last week's low of 87.40. This would then be followed by 87 cents and key support at 86.50 cents, which rests along the support line of the downward channel extending from 8950 to 8735.  USD was slightly weaker today despite Friday's better-than-expected US consumer confidence, home sales and jobless claims figures. The dollar came under pressure from profit-taking and position squaring ahead of the holiday. Nevertheless, the dollar remains well bid after a recent series of better than expected data. This helped rekindle optimism that the US economy was showing signs of recovery and pushed the dollar index to a 5-month high of 118.12 last week. Therefore, the profit-taking is seen as healthy given that the index rose over 3% from a December 17 low of 114.41.  Sterling fell across the board today as it struggled to maintain above the $1.45 and 190 yen marks. GBP also gave back recent gains against the euro as it shed gains from a 5-month high of 60.56 pence against the euro and a new 2-1/2 year high of 191.08 reached last week. Profit-taking in the pound outweighed a rise in the UK's Gfk Confidence index which climbed to -1 in December from -3. Consumer spending has been the main driver of the economy this year as successive rate cuts from the BoE have helped the British manufacturing slump and kept the housing market booming.  Nevertheless, after failing to overcome highs around 1.4550 last week, sterling is also seen pressured by the dollar. GBP/USD backing is seen at 1.4460, and 1.4420 while the pair faces pressure at 1.4540--the 61.8% retracement of the 1.4829-1.4064 move. Following resistance is seen at 1.460 and 1.4640/50, which marks the downward trend line from the June 5 high of 1.5315 thru the Jan 8 high of 1.5103. Support is seen at 1.4445, the 50% Fibonacci retracement of the same move.  In other news, European Central Bank President Wim Duisenberg said today that he plans to remain in office at least to the end of 2002 but reiterated his official position that he would retire at some time before the end of his term in 2006 due to his age. Duisenberg denied the existence of a deal with France for him to leave office early in 2002 despite French President Jacques Chirac having before said that under a "gentlemen's agreement" Duisenberg would make way for a French candidate in 2002. Duisenberg's will to stay on as central bank chief is seen as a positive for the euro because it shows the Bank is not giving into political pressures to appoint a new head.  	[IMAGE] Audio Mkt. 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