Friday July 17, 3:45 pm Eastern Time
INSIGHT -- Dollar/yen steady but headed lower soon
NEW YORK, July 17 (Reuters) - As the race for Japan's prime ministership
heats up, dollar/yen may briefly flirt with higher levels before
resuming a down trend, chartists said.
''The outlook is definitely bearish for the dollar,'' said Mark Roberts,
technician at I.D.E.A., even as the greenback held above key support
levels after a night of broad movements.
Shortly before noon the unit traded at 139.68/78 yen, having popped
between 140.22 and 138.55 overnight.
Chartists said the dollar's ability to bounce off the bottom of a
four-day down channel at 138.50 was a good sign and hinted it might have
room to briefly test the top.
''We could test the top of the channel at 140.50,'' Roberts said. If the
top should give way, chartists predicted a run toward the 141.40 level
which marks a 50 percent retracement of dollar/yen's drop from this week
after spiking to 144.25 on news that Japan's prime minister Ryutaro
Hashimoto had resigned.
After that, however, technicians said there was a chance for dollar/yen
to drop through the 139.20 level and after that through the 138.94 area
which marks a 50 percent retracement of its rally from the major-one
month low at 133.60 on June 19 to Monday's 144.28 high.
Mark/yen meanwhile is holding above the 78.00 level but is also seen
testing lower with 75.75 said to be an interim target.
On the topside the 78.60 level is seen as resistance.
Dollar/mark meanwhile is said to be looking slightly more confusing on
the charts, analysts admitted.
Looking shaky since the 1.79 level broke, chartists said support at the
1.7830 may soon give way letting the pair slip as low as 1.7750.
''If we close below 1.78, we could see the move there be on its way,''
Roberts said.
The British pound climbed against the dollar but chartists said the
$1.6456 level looked toppish. From there, cable should correct towards
the $1.6330 level soon.
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