[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]  Protectionism Saps Dollar Strength Despite Invigorating Data  March 6, 7:00 AM: EUR/$..0.8703 $/JPY..132.15 GBP/$..1.4223 $/CHF..1.6975  Protectionism Saps Dollar Strength Despite Invigorating Data by Jes Black  At 10:00:00 AM US Jan Factory Orders (exp 1%, prev 1.2%) At 2:00:00 PM US Feb Fed Beige Book (exp n/f, prev  n/a)  The dollar fell back below 131.80 yen and ceded the 87-cent mark to the euro today as dollar bulls sat on the sidelines despite upbeat economic data. USD resilience in the face of Enronitis and shaky stock market valuations was admirable, but the market has again been pulled down by fears that protectionism will slow the inflow of needed investment capital to the US. Latin American learned the hard way that capital import dependant countries can ill afford protectionist policies.  Therefore, uncertainties related to the imposition of steel imports are likely to have a dampening effect on the dollar. Moreover, a protectionist stance only underscores the competitive problem associated with a strong dollar and is likely to make it more difficult for the greenback to find strength from its upbeat data.  Nevertheless, the recent spate of strong economic reports will keep the dollar resilient. Today's release of the beige book should show further evidence of an improvement in economic conditions. However, like Greenspan's cautiously optimistic speech last week, the overall tone of the report will most likely be guarded as consumer debt and corporate profitability still present downside risks.  Thursday's speech by Greenspan on monetary policy and Friday's key US labor market report will also keep dollar bulls anxiously awaiting further signs of recovery which may pull the greenback out of rangebound trading. But the dollar's recent failure to benefit from strong data and Wall Street's gains has left bulls feeling uncertain. Therefore, currencies continue to trade familiar ranges with trends hard to find.  USD/JPY slipped to a day's low of 131.70 and the renewed break of 131.80 support could lead to a bearish phase after a month long trading range of 131.80 to 135.20.  Given the abundance of negative news from Japan, a rebound back towards 132.50 cannot be ruled out, but a break of 131.50 would speak against it. Upside capped at 132.50, 133.50 and 133.70, 134.00/10, 134.70/85 and strong resistance at 135.15. Support holds at 132.00, 131.80 and 131.50.  Supporting the yen were signs that US fund managers would increase their exposure to Japan just as government officials have created an artificial floor under share prices through stricter short selling laws. Combined with repatriation fears, and the government's resolve to boost Japanese assets ahead of March 31, JPY is likely to fend off the negative news that comes its way.   Case in point was today's announcement from Moody's that there was a  significantly high probability  a current review will lead to a two-notch cut in Japan's rating. Moody's put Japan on review in mid-February and at the time warned that a two-notch cut in the present Aaa3 rating was a risk. However, the decision was not imminent Moody's said. Unconfirmed talk that Japan's state pension fund may be planning to start a huge foreign bond investment plan also kept USD/JPY from slipping below the key 131.80 support, but lack of resolve on the part of dollar bulls kept the pair weak. However, dealers are likely to hold off on further selling and await the market's reaction to Japan's Q4 GDP data due Friday which is again expected to be negative.  EUR/USD hovered around the 87-cent mark but did not show a clear trend for traders. Dealers say only a sustained break above 87.30 or below 86.30 would give a better direction and until then, many are on the sidelines. Holding above 87-cents and taking out 87.35 resistance is now critical for the euro. Failure to maintain above 87 cents could initiate a fall back towards last week's 3-week low of 86.25. A move through 86.30/15 would target its 6-month low of 85.63. But technical indicators are mixed and the steel import debate is likely to intensify, keeping pressure on the dollar. Support is seen at 86.60, 86.30, 86.15, and 85.60. Resistance is viewed at 87.30, and 87.85.  GBP/USD fell to a day's low of 1.4204 from a high of 1.4246 after a strong move in EUR/GBP from trendline support at 61.15 to 61.30 kept sterling under pressure. On Tuesday, cable fell to a day's low of 1.4204 after twice failing to break strong resistance seen at 1.4240. Resistance is eyed at 1.4240, 1.4280 and 1.430. Support holds at 1.4180 and 1.4130.   Both the euro and sterling traded steady against the dollar today ahead of their respective monetary policy meetings on Thursday. Improving economic data and benign inflationary pressures are seen allowing the ECB and BoE to keep rates unchanged at 3.25% and 4.0%. In fact, financial markets are already pricing in a quarter percentage point ECB rate rise by June and BoE Governor George last week had to verbally intervene in the interest rate market to convince futures traders to lower expectations of rate hikes later this year. The German DIW institute head also doesn't expect more ECB rate cuts in this cycle, saying the next move is up instead of down.  The euro was little changed after German data showed industrial orders fell more than expected in January, down -2.1% m/m, well below the -1.4% expected following the previous 4.2% rise. This brought the yearly orders rate down to -5.8% from -5.4%. German unemployment on the other hand stabilized at 9.6% in February.  Meanwhile, USD/CHF is trading at around $1.6970 as markets wait for Thursday's Swiss Q4 GDP figures for more clues about the Swiss National Bank's next likely monetary policy decision on March 21, although no rate change is expected. A Reuters survey projected that Q4 GDP would fall to 0.35% or even as low as -1.5% from the previous quarter's 0.8%, highlighting the weakness in the Swiss economy. Support is seen at 1.6900, backed by the 200-day moving average of 1.6856 and the 1.680-franc figure. Upside capped at 1.7060, 1.710 and 1.7140.  	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