[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]  EUR/USD Collapses to 6-Month Low as Dollar Reins Supreme January 25, 7:00 AM: EUR/$..0.8663 $/JPY..134.34 GBP/$..1.4139 $/CHF..1.6976  EUR/USD Collapses to 6-Month Low as Dollar Reins Supreme by Jes Black  At10:00:00 AM US Dec Existing Homes (exp 5.2 mln, prev 5.21 mln)  The ice finally broke under EUR/USD this morning after tripping stop loss orders around 87.35 on its way to a 6-month low of 86.70. The euro suffered a one-two punch this week on disappointing remarks from ECB president Duisenberg which contrasted with upbeat comments by Fed Chairman Greenspan. Markets were pleased by Greenspan's admission that he believes the worst has past. But players were unenthusiastic by Duisenberg's assertion that interest rates are on hold for the time being and that Germany's rising budget deficit was a further concern. By straight-jacketing Germany, the ECB has nearly assured markets that the economy's engine of growth will continue to lag behind the rest of the Eurozone.  EUR/USD has plunged nearly 2.5% since Duisenberg's comments on Wednesday. But the break below key channel support at 87.40/50 brought about a technical decline to a new 6-month low of 86.70. Support at 86.80 must now hold to avoid targeting 86.50 on its way to 85.55 the 71.8% Fibonacci retracement of the move from 82.25 to 95.95. Temporary moves higher are not seen by the market as indicating strength, and are regarded as selling opportunities, dealers say. Follow up support is seen at  87.0 and 86.80. Resistance is viewed at 88.15, 88.60 and 89.10-- the 50% Fibonacci retracement of the move from 82.25 to 95.96.  Sterling and the Swiss franc dropped in tandem with the single currency against the dollar after breaking below support at $1.4200 and 1.6775 francs respectively. EUR/GBP was the only upside to an otherwise tragic day for the single currency as it rose to a 3-week high of 61.21. Across the board sterling weakness sent GBP/USD to a 7-week low of $1.4165 while GBP/JPY fell 1.5 yen to a day's low of 190.86. GBP/USD also suffered a technical defeat today after breaking below 1.4220/00. Support is seen at 1.4160 followed by 1.4113 which marks the 61.8% Fibonacci retracement of last years move from 1.3680 to 1.4829.  USD/CHF rose to a one-month high of 1.6937 and now faces resistance at the December 26 reaction high of 1.6945. A move beyond 1.6945, which marks the 50% Fibonacci retracement of last year's July high of 1.8221 to the September low of 1.5670, will be key for further gains in Swissy. Support is seen at 1.6880 and 1.6840.  USD/JPY also rose to a new 39-month high of 134.93 in Tokyo trade as falls in the yen have lead to asset sales by foreigners which has lead to a vicious cycle of further yen weakness. Moreover, fears that Japan's sovereign-debt rating will soon be downgraded has convinced most dealers that there is further weakness in store for JPY. Resistance is seen at 135.00 followed by 135.40 and 136.00. Support is seen at 134.50 and 133.80.  The fundamentals behind today's move reflect growing optimism about a turnaround in the US economy. Thursday's testimony by Fed Chairman Greenspan showed a rare admission of error in his previously downbeat assessment of the economy. Greenspan said that the forces restraining the US economy are diminishing and activity is beginning to firm. But he also projected that the US is close to zero GDP growth and that there will need to be signs of business investment and strong consumer demand for the recovery to gather momentum.   The only domestic economic release of note today is the National Association of Realtors' existing home sales report, which is expected to show that housing activity weakened slightly by 0.1% in December to bring the total to 5.2 mln from 5.21.  Today's earnings announcements are not as heavy as the past two days and include Ericsson LM Telephone and Lockheed Martin.     	[IMAGE] Audio Mkt. Analysis Markets Rally as Greenspan Clarifies Outlook        Articles & Ideas  ECB: One More Cut    NAM & the Strong Dollar: Phase II       Articles & Ideas Forex Glossary   Economic Indicators   Forex Guides   Link Library      [IMAGE]  	
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