[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 Recoups Losses, But Gains Limited on Market Holiday January 21, 2:00 AM: EUR/$..0.8834 $/JPY..132.64 GBP/$..1.4354 $/CHF..1.6619  USD Recoups Losses, But Gains Limited on Market Holiday by Jes Black  US Financial Markets closed for Market Holiday.  The dollar recouped the majority of its losses against the majors in light trade on Monday after profit taking trading pushed the dollar to a one-week low of 88.66 cents against the euro and a 4-day low of 132.05 yen. But currency movements stabilized after Tokyo caught up with the dollar sell off in Friday's US session and traders in London took a breather due to decreased volume ahead of the Martin Luther King Jr. holiday in the U.S.   There was little economic data from Europe today to move the markets. But the euro area's industrial production figures for November showed a larger than expected decline to -4.3% from -2.7% in October, the biggest y/y drop since July 93. It was the third consecutive decline and raises the question of whether the European Central Bank will lower rates oat its next meeting on February 7 given that inflation is now at their 2% target rate.  Markets will also ponder the direction of US rates this week as Fed Chairman Greenspan is scheduled to speak before the Senate Budget Committee on Thursday. The much-publicized columnist, John Berry, wrote in Saturday's edition of the Washington Post that Greenspan "sounded more pessimistic than intended about the prospects for U.S. economic recovery, according to several Fed sources." Therefore, markets are now 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. The dollar appreciated over 6% last year vs the euro and economists are now divided over whether a further rate cut would help the dollar.   EUR/USD rose to a 1-week high of 88.66 in Tokyo trade, after breaking through resistance around 88.50. The high also marked the 200-day moving average and was not broken after plunging below that level following last Tuesday's 2-cent drop. The single currency then eased slightly in London trade to support at 88.36. The real test will be on Tuesday to see if it can add to Friday's gains after falling 2% vs USD and JPY last week. The EU's statement on Friday that Eurozone GDP for 2001 could have fallen to a level between -0.3% and 0.1% is likely to keep pressure on the euro and only a break back above 89.50 is seen improving the chances of the single currency after it hit a 3-week low of 87.91 last Thursday. Key support is seen 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.  USD rose to a day's high of 132.66 yen after profit taking on Friday's US session and Monday's Tokyo eroded after the dollar held above 132.00 support. USD is still off of Friday's 1-week high of 133.03 but profit taking from recent gains has not changed sentiment over a weaker yen. USD/JPY support is seen at 132.0, 131.80 and 131.60. Resistance is eyed at 133.0 and 133.35.  In Japan, the BoJ published the minutes of their November 29 meeting, showing members voted 8-1 to ease monetary policy. Moreover, a Japan MoF official urged debate on BoJ buying of foreign bonds as a way to weaken the yen. Given BoJ Governor Hayami's increasing concern with deflation, it is likely that the central bank will in the near future futher increase the money supply in some fashion, which would weaken the yen.   Meanwhile, U.S. Treasury Secretary Paul O'Neill's remarked on Monday that he was not planning to discuss foreign exchange at his scheduled meetings with Japanese PM Koizumi and Financial Services Minister Yanagisawa later in the day. The yen's sharp fall in recent months has drawn increasing attention after last week's rumblings in SE Asia and China over a weak yen and Friday's complaints by the National Association of Manufacturers over a strong dollar making it difficult to compete with cheaper-priced Japanese goods. But O'Neill and the administration seem ready to tolerate a weaker yen if it means Japan has banks dump bad loans, accelerate reform and deregulate markets, like the US did.  GBP/USD pared earlier gains after hitting a high of 1.4418 in Tokyo and fell to a low of 1.4353 in London trade. Support at 1.4330 is seen as critical. It marks the 50% Fibonacci retracement of the move from 1.4060 to 1.4606. A break of that level would call upon 1.43 on its way to 1.4267, the 61.8% retracement of the same move. Resistance is seen at 1.4440, 1.4480, 1.450 and 1.4550. Key support is at 1.4330.  Today's data from the UK showed UK public sector net cash requirement (PSNCR) jumped to 9.44 billion pounds in December from 5.4 the previous month. The figure was the biggest monthly shortfall since March 96. This does not mean public finances are in bad shape because Tres Sec Gordon Brown has accumulated surpluses in the past year. Moreover, public sector net debt outstanding was just 318 pounds, or 31.6% of GDP, which is very low figure compared to most other industrialized countries.   USD/CHF rose to a high of 1.6633 after it held above support at 1.6580 following a 1-1/4 centimes loss on Friday in the wake of EUR/USD gains. Technical weakness was also apparent after two attempts to break back through resistance at 1.6725 were thwarted. Support stands at 1.6590, 1.6550 and 1.6520. Upside capped at 1.6725, 1.68 and 1.69.     	[IMAGE] Audio Mkt. 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