Major Technical Analysis

euro

The European currency rallied to the upside direction yesterday after it reversed back from the significant support level as low as 1.4630s to the upside trend line to hold the euro up until the major resistance level at 1.4760s in high volume to indicate the upside potential for today setting the target at the 1.4830s resistance level. The trading range for today might be between the key resistance level at 1.4880 and the key support level at 1.4640. The general trend is up as far as 1. 4270 remains intact targets now at 1.5000 and 1.5370
We expect buying Euro above 1.4735 with a target at 1.4830, stop loss below 1.4690.

gbp

The British pound yesterday declined in a strong bearish movement since it failed to pass the key resistance level at 2.0670s to drop down hitting the levels of 2.0560s opening a new chance for the pound to retest the major upside trend line at the point of 2.0460s support. Today, the pound might progress towards the downside as well. The trading range for today might be between the key resistance level at 2.0680 and the key support level at 2.0400.The general trend is up as far as 1.9950 remains intact targets now at 2.1150 and 2.1400
We expect selling sterling below 2.0585 with a target at 2.0480 stop loss above 2.0640.

jpy

The dollar against the Japanese yen depreciated to the downside direction yesterday with high levels of volume in a very strong bearish pattern since it couldn't breach the main resistance level two days ago at the minor downside trend line at 111.00 to arrange a downside trend. Today we expect the pair to progress towards the downside as well. The trading range for today will be between the key resistance at 110.50 and the key support at 108.50The general trend is down as far as 121.30 remains intact, targets at 106.45 and 104.70.
We expect selling USD/JPY below 109.90 with a target at 108.80, stop loss above 110.50

Currency Updates

Aversion Assured...

(11:30 GMT - 4/12/2007)After majors declining against the disguised strength of the dollar, it is assured the investors now are running away from riskier assets and heading more towards safer assets. Risk aversion seems to be dominating the markets as the unwinding of carry trades is back in action. Markets have locked the fact that a rate cut will be definite in both the EU and the UK and the affect has surfaced.The Japanese Yen captured the spotlight today as it dragged the USD/JPY pair back to the 109.00 levels. Although the dollar seemed to be performing well in the early transactions it didn't have enough momentum to affect the pair. The pair recorded a high of 110.53 before recording a low of 109.70.The 13 nation currency was able to rebound against the dollar to record a new high for the day at 1.4724 after it reached a low of 1.4634. The Euro Zone released its PPI reading for the month of October coming in at 0.6% higher than both the expected and previous readings of 0.4%. As for the annual reading, it was released at 3.3% inclining from the forecasted reading of 3.0% and the prior reading of 2.7%. Still to come later this week is rate decision by the ECB where it is widely expected that the rates will be held steady at 4.00%.The dollar is losing it against the most active currencies traded as the Royal currency, similar to the Euro, was able to reverse the morning correction. With a fundamental free calendar for today, the sterling recorded a high of 2.0672 before hitting a low of 2.0586. The highlight remains the decision by the MPC where rates will remain unchanged at 5.75%.Unwinding of carry trades was also evident on the Canadian Dollar and the Australian dollar in the morning ahead of both central banks' rate decisions, but due to further weakening of the dollar, they gained slight momentum. The BoC and RBA rate decision are due later today where they both are expected to remain unchanged at 4.50% and 6.75% respectively.

Market News

BoC Rate Decision
The Bank of Canada's rate decision was released showing a surprise cut in rates by 25 basis points to take there benchmark rates to 4.25% against the widely expected unchanged rates of 4.50%.
Losses from the U.S. sub-prime mortgages increased as the housing market slump continues to worsen causing bank funding costs to increase worldwide including Canada. With a damaged U.S. economy, Canadian exports are facing increased risks to the downside but after the collapse of the Canadian dollar to reach 1.0152 against the US dollar, marking the highest since September 20; it might not be that bad. Inflationary pressures changed the bank's outlook for 2009 concerning inflationary risks causing them to go to the downside.

Crosses Technical Analysis

GBP/JPY

The Pound inclined yesterday against the Yen to reach the first target at 227.90, yet could not hold above it and declined back, now the first target is still the same then the 229.20s level, as the pair's general trend remains well to the upside but it needs some momentum, the point at 226.96 seems to offer good demand for the pair.

EUR/JPY

The Euro declined against the Yen, as the pair still needs to gather some momentum in order to reach the next target at the 163.70s, the technical indicators show an upside potential for the pair to continue its upside general trend, and the point at 161.25 seems to offer good demand for the pair.

EUR/GBP

The Euro declined further against the Pound yesterday to continue the correctional move it started, but the general trend for the pair remains well to the upside, the technical indicators are showing an upside potential now as the next target is the 0.7130s level, and the point at 0.7090 seems to offer good demand for the pair.

Major Technical Analysis

euro

The European currency fluctuated in a balanced move yesterday below the key upside trend line; however, the technical oscillators studies pointed some reversal signals to take the Euro to the upside today depending on the high level of volume to cause a major breakthrough to the levels of 1.4710 resistance. The trading range for today might be between the key resistance level at 1.4780 and the key support level at 1.4870. The general trend is up as far as 1. 4270 remains intact targets now at 1.5000 and 1.5370.
We expect buying Euro above 1.4650 with a target at 1.4735, stop loss below 1.4610.

gbp

The British pound yesterday arranged a bullish move despite the downside tendency that appeared in the first trading session as the pound couldn’t breach the key support level at 2.0520s to set the upside target as the high as 2.0680s levels. Today we expect the pound to continue towards the upside direction. The trading range for today might be between the key resistance level at 2.0800 and the key support level at 2.0500.The general trend is up as far as 1.9950 remains intact targets now at 2.1150 and 2.1400.
We expect buying sterling above 2.0640 with a target at 2.0720 stop loss below 2.0585.

jpy

The dollar against the Japanese yen showed a quiet movement last time due to the low volume however it managed a key drop to hit the important support at 110.05. On the other hand, the technical oscillator parameters placed some bearish signals yesterday to lead the pair to the downside. The trading range for today will be between the key resistance at 111.50 and the key support at 109.00The general trend is down as far as 121.30 remains intact, targets at 106.45 and 104.80.
We expect selling USD/JPY below 110.65 with a target at 109.50, stop loss above 111.10.

Crosses Technical Analysis

GBP/JPY

The Pound declined slightly against the Yen, yet the pair is most likely to be heading towards the upside and it needs some momentum to progress its upside general trend, and breach the target around the 227.90s in order to reach the next target at 229.20s, and the point at 226.58 seems to offer good demand for the pair.

EUR/JPY

The Euro also declined against the Yen, as the pair is yet to gather some momentum in order to continue the upside general trend, as the targets are still at the 163.70s then at the 165.95s levels, the technical indicators are showing an upside potential, and the point at 161.52 seems to offer good demand for the pair.

EUR/GBP

The Euro declined against the Pound, as the pair continued the 38.2% correctional move on febunacci's retracement, and it seems the pair now is ready to gain again to continue the pair's upside general trend, the first target should be the 0.7150s level, and the point at 0.7110 seems to offer good demand for the pair.

Major Technical Analysis

euro

The European currency started with a bearish day last week since it lacked bullish momentum which played a significant role in taking the euro down to reach the important support level at 1.4630s, creating a new downside correction. Today we expect the euro to progress towards the downside correction. The trading range for today might be between the key resistance level at 1.4750 and the key support level at 1.4520. The general trend is up as far as 1. 4270 remains intact targets now at 1.5000 and 1.5370

gbp

The British pound drove through the downside channel last week since it was unable to breach the major resistance level at 2.0700 to reverse back to the downside in terms of correctional movements to extend the downside channel for today. The trading range for today might be between the key resistance level at 2.0700 and the key support level at 2.0450.The general trend is up as far as 1.9950 remains intact targets now at 2.1150 and 2.1400
We expect selling sterling below 2.0585 with a target at 2.0490 stop loss above 2.0635.

jpy

The dollar against the Japanese yen rallied to the upside direction last Friday to set the upside target at 112.10 in form of an upside projection after it passed the key level at 110.70s. The technical parameters indicated the upside target as they confirmed the upside signals. The trading range for today will be between the key resistance at 112.50 and the key support at 108.20The general trend is down as far as 121.30 remains intact, targets at 106.45 and 104.80.
We expect buying USD/JPY above 111.00 with a target at 112.00, stop loss below 110.50.