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(March 18, 2002) CURRENCIES: The U.S. Dollar Index futures began this week on a firm note, while Japanese Yen futures and Euro currency futures started off under pressure. Ideas that repatriation of funds back to Japan before the end of the current fiscal year weighed on the market early in the week. Also, news that Koichi Kato, a reformer, resigned early Monday weighed heavily on the June Japanese Yen futures. Mr. Kato resigned to assume responsibility for charges brought against one of his senior aides for income tax evasion.

Early Monday the June Japanese Yen Futures traded lower through the 18-day moving average. With this movement, there was talk among traders that perhaps the market will resume the downtrend. At this point I am recommending staying on the sidelines. Until the market can establish a new trading range, I believe any position would carry too much risk.

The June U.S. Dollar Index futures began the week looking firm as weakness in the June Japanese Yen translated to a stronger U.S. Dollar. Traders this week will be looking closely at this week's meeting of the Federal Open Market Committee. Traders will be watching to see if the Fed shifts monetary policy to a neutral bias. The majority of analysts believe that to be the case. The June U.S. Dollar futures established a low and support at $117.25. If that support is breached, I recommend a short position. On the other hand, the March 12th high of $118.92 offers good resistance and I believe that if that level is taken out, that the June U.S. Dollar Index futures could trade much higher. I recommend a long position on a stop above $118.95.

June Euro currency futures started the week of a little soft, following last week's continuation of its rebound. Recent economic data has suggested that the European Zone is in recovery, as is the U.S. With the June Euro currency futures taking out the February 11th high, the market appears to me to be in an uptrend. I am recommending a long position in the June Euro currency on a pullback to the 18-day average. Buy long on a pull back to 87.020.

RECOMMENDATIONS--June U.S. Dollar Index: Buy long at $118.95 stop. Sell short at $117.23 stop.

March Euro Currency Futures: Buy long at 87.020.

Les Jones

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