[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]  Euro Broadly Stronger, But Gains vs Dollar Seen Fleeting  February 8, 7:00 AM: EUR/$..0.8736 $/JPY..134.37 GBP/$..1.4156 $/CHF..1.6842  Euro Broadly Stronger, But Gains vs Dollar Seen Fleeting by Jes Black  At 10:00:00 AM US Dec Wholesale Inventories (exp n/f, prev -1.1%)  The dollar came under renewed pressure against the broadly stronger single currency in European trade. EUR/JPY forged the way, rising 1.5% to a high of 117.62 from an overnight low of 115.65. This outpaced the more modest 0.7% gain in USD/JPY to a day's high of 134.54 and allowed the euro to test key resistance at 87.50. Traders say the euro's upward correction against the dollar could carry as high as 88 cents before a renewed sell off. Euro gains are still seen temporary as capital moves to safer instruments such as gold in the midst of renewed uncertainty.  The dollar remains depressed this week by the ongoing Enron affair, which has spread a dark cloud over the markets and caused investors to overlook recent upbeat US data. Indications are that conditions in the US are improving and that the US economy is on the road to recovery. Therefore, USD weakness should only be temporary and will be mitigated as signs of a rebounding US economy increasingly emerge. Yet, in the meantime the dollar will continue to take its direction from Wall Street.  Currency markets are also likely to hold steady ahead of this weekend's meeting of G7 finance ministers in Canada. USD/JPY upside is therefore seen limited in the near-term since Japan is becoming more reluctant for the yen to weaken further. Especially since this weekend's meeting is likely to spark more cries of foul from US manufacturers that the weak yen is undermining their trade competitiveness.  Tokyo stocks rebounded today after Japanese officials indicated their willingness to use public funds to buy stocks from banks. Bank shares led a rally after Japanese FinMin Shiokawa said his ministry was backing a stock-buying body that would buy shares from banks, which are trying to get rid of their massive shareholdings because losses have eroded their capital. Shiokawa said that his ministry is prepared to spend up to two trillion yen ($14.96 billion) in public money to buy stocks from Japanese banks. "We must halt this fall in shares. It's like diarrhea, we must stop it," he said. Moreover, the offloading of cross-shareholdings by banks and insurance companies has been a big factor in the Nikkei's slide. The index ended up 2% from Wednesday's 18-year low, but it is still down 30% since January 1, 2001. Historically, the popular index is down 75% from its 1989 bubble high of 38915.  JPY fell over one yen to a day's low of 134.54 against the dollar after reaching a day's high of 133.58 and 115.97 against the euro following the Bank of Japan's decision to keep monetary policy unchanged. The central bank's reluctance to add further liquidity came as no surprise, but markets had pushed the yen to earlier session lows of 134.17 against the dollar in the hope the BoJ would take further action.   USD/JPY upside is seen capped at 134.50 followed by 135.20. The pair is also expected to remain within the 132-135 range over the short term as the cost of the weak yen policy has been detrimental to asset prices as it undermines confidence in the ability to hold value. Therefore, given the weakened state of Japanese financial institutions amid falling stock prices, the Japanese are now more likely to shun yen weakness in order to restore confidence in the market.  Meanwhile, EUR/USD could break 87.50 and test as high as 87.75-88.00 if the US has another disappointing day on Wall Street. However, dealers still regard this as the top of an upward correction in the euro as the dollar bears the brunt of  Enronitis.  Support is seen at 87.00/15 and 86.45.  GBP/USD rose to a high of 1.4169 on the back of EUR/USD strength despite sterling falling to a 2-week low of 61.96 pence to the euro. But only a move above 1.4177 would add to sterling's strength against the dollar.  This level marks the 61.8% retracement of the decline from 1.4247 to 1.4064. Cable peaked at a 1-week high of 1.4247 in European trade on Tuesday and that marks the next resistance. Support is seen at 1.4115 and failure to maintain above 1.4110 would call upon key support at 1.4180, which marks the 38.2% retracement of the 1.4418-1.4038 move. Follow up support is seen at last week's 6-month lows of 1.4045. Upside capped at 1.4235, 1.4270 and 1.4300.  The only data from the US today is wholesale inventories. They will likely show that merchants continued to make progress trimming inventories in December, although sales also likely remained lackluster. The lack of data means the dollar will take its cue from Wall Street, which continues to follow the developments in the Enron affair. Today's earnings announcements include Goodyear Tire & Rubber, Universal and Wendy s International    	[IMAGE] Audio Mkt. Analysis Euro Crawls Higher in Quiet Trading       Articles & Ideas  A Weak Yen Bites   Even Koizumi Drags Down the Yen       Articles & Ideas Forex Glossary   Economic Indicators   Forex Guides   Link Library      [IMAGE] 	
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