Aussie believed to be buoyed by banana prices

EUR USD (1.2760)
The opening of the European session on Friday only saw the single-currency a tad lower. But later on in NY, it managed to flex some muscle with more than a big figure rally which hoisted it almost straight up to its recent 1.2770 peak.

The market simply went from being overly bullish on the single-currency on Thursday to bearish on Friday morning as some traders wanted to sell the euro. In a market which is rather sensitive to interest rates, the Bernanke address from the previous week also kick-started the euro bullish train. Later on, the release of the Beige Book just provided some with another argument about the end of the Fed tightening cycle coming closer and one could even hear talk about the single-currency hitting $1.30 on a weak GDP number. On Thursday it very much sounded like it was the last hoorah for Fed rate hikes, at least as far as some traders were concerned. However, one could detect a bit of a change in tune amongst the short-term crowd on Friday morning as there was all of a sudden talk about an August Fed rate hike still being on the table and even some chatter about a ‘sovereign account’ selling the euro. Nevertheless, as some market participants tried the euro from the short side, these types of noises were just indicative of the short-term crowd’s preference for the short side. But on the release of the GDP number, which came in lower than expected, the single currency was lifted to a fresh high for the day as some had to jump in and cover their positions.

For risk-reward considerations our opinion on the single currency is neutral. Any further recovery would run into supply at 1.2845/50. This still serves as the trigger for an assault of 1.2980 (June high) and even beyond. A bullish strategy would also be justified in the 1.2610/20 zone with a tight risk-limit.

USD JPY (114.30)
As traders were cutting back on their short yen positions, there was no shortage of arguments to do so. Despite Friday’s US GDP number, the attention grabber was the renewed talk about the further revaluation of the yuan. In this respect, the Chinese Prime Minister even went so far as to pledge a ‘gradual raise’ in interest rates. Talk about the slow appreciation of the yuan is hardly anything new and it seems as if the market forgot that the initial revaluation could not help the yen for much longer than a couple of days. The dollar slipped below our 115.35 limit and continued to fall a big figure thereafter. This morning it even violated its best support at 114.40 and as a result it finds itself in a vulnerable position. The downside risk is for 113.30/35 and any weakness below this could even see the decline accelerating. On a bounce, resistances stand at 115.30 and at 115.85.

EUR JPY (145.90)
The euro has started one of its very familiar corrections after having hit a lofty 148.05 record high last week. We reckon with risk down to 145.60/75, which also marks a critical point for a more severe setback to 143.00. Overhead, we expect to run into hurdles at 146.90 (subsequent limit) and at 147.50.

EUR GBP (0.6845)
The target remains 0.6730. The euro retested its recent trough on Friday, but managed to recover again from there. The risk-limit to the bearish orientation is visible at 0.6860. For today we anticipate intermediate support at 0.6800. Beyond the pivot, the position will be neutral in which case the next hurdle can already be expected at 0.6885.

GBP USD (1.8655)
Even though there has been no new data releases on Friday that could shed some light on the direction of interest rates in the UK, but it is clear that some market participants are betting on a rate hike at the next BoE meeting. The upside remains open for additional gains to 1.8775 and thereafter to 1.8965. On a dip, supports are visible at 1.8530 and 1.8445/60. The last demand point remains the gatekeeper for short-term stability.

AUD USD (0.7660)
Our 0.7670/75 objective proved to have been the peak of last week’s recovery. Also here, the prospect of a rate hike is keeping traders busy. Market participants now even expect two rate hikes on the back of a strong surge in banana prices which is said to be fuelling inflation. Once the AUD clears the first the second one stands at 0.7810/15. In this event intermediate resistance will be poor ahead of there. In the meanwhile, we are looking for supports at 0.7625 and at 0.7570.

Euro’s upside break runs into supply

EUR USD (1.2680)
Yesterday in the European session, the single currency picked up from where it had left the day before and continued to loftier levels, but it briefly edged lower when some of these positions were thrown out. With the euro optically lower and the euro bulls ready to jump in, they quickly pushed it to a 1.2770 peak. However, the liquidation of these positions sent it almost a big figure lower in NY.

With the euro on the way up in the European morning session, traders enthusiastically waved the Beige Book as the reason. But this has already been in the market for some time, and against the backdrop of the Bernanke address, it just had the same to offer. After the better-than-expected US durable goods number and weekly jobless claims, the euro only briefly dipped. While some traders were scratching their heads, others simply said that the dollar fell out of favour and that it was definitely the end of the Fed’s tightening cycle. By then, chatter had already started about today’s GDP number from the US, which could see the euro rallying to as high as $1.30. However, the eagerness with which the single currency was bought after the release of the US data, had less to do with the numbers and more with the short-term euro bulls having already decided to buy and the dip thereafter just provided the right opportunity to do so. On top it is also possible that some medium-term* profit-taking could have been behind he euro’s sell-off thereafter.

The single currency did nothing but to test our 1.2765 resistance. As we have already mentioned, a recovery would be hampered also at 1.2845. The second resistance, however, serves as the trigger for an assault of 1.2980 (June high) and even beyond. Downside support appears to be thin ahead of 1.2580 and 1.2510 this morning, which is the current risk.

USD JPY (115.55)
Yesterday’s dip to 115.60 allowed us to enter a bullish strategy for target 117.90. The weakness was largely inspired by talk about the further appreciation of the renminbi, which was again a discussion point on Thursday. This time it was all about a perception that pressure is building in China itself as well as internationally for more steps to be taken in this direction. From the US side, the whole issue of imposing tariffs on Chinese exports is back on the agenda, but it remains debateable to what extent this will really solve the problem. Intermediate resistance is visible at 116.20. As already indicated, the limit to the positive orientation must be kept tight at 115.35. For today, we reckon with critical support at 114.40.

EUR JPY (146.55)
The euro continued its upward march yesterday where it hit an all time high at 148.05, but it corrected sharply lower to 146.50 in Asia this morning. For the time being the cross finds itself in neutral territory. Any further weakness can count on supports at 146.10 and at 145.60. The last point must be treated as critical for a more severe sell-off (143.00). To the upside, supply is lurking at 147.50 and at 148.50.

EUR GBP (0.6830)
The euro retreated yesterday after having tested our 0.6860 risk limit to the bearish orientation. Whilst below there, the target remains 0.6730. Intermediate support is visible at 0.6800. Beyond the pivot, the position will be neutral in which case the next hurdle can already be expected at 0.6880.

GBP USD (1.8575)
Sterling initially romped higher yesterday, but later on retreated in line with the EUR/USD. With strong UK mortgage approvals and mortgage lending the highest on record, some traders had a reason to jump in and buy. Nevertheless, the outlook remains stable and in line with what has already been said, the upside is still open for the Pound to push to the lofty 1.8775 level due to a lack of supply ahead of it. To the downside, expect to run into supports at 1.8530 and 1.8430, of which the last mentioned is also the gatekeeper for short-term stability.

AUD USD (0.7625)
The current objective remains at 0.7670/75 (missed by a mere 10 ticks so far). Once the AUD clears that, our second target stands at 0.7790 (also the May peak), which should not render any good resistance at all. On a dip, we expect to run into support at 0.7570. The limit, however, within the positive orientation must be tightened again to 0.7605.

EUR/USD: Diversification vs US rate hike

EUR USD (1.2680)
The euro put up a brave fight to the upside in European trading on Tuesday. But this was not enough as it was finally sold off to a 1.2565 low in the NY session where it was left slumbering right into the FE this morning. It seems as if traders were very much caught between the devil and the deep blue sea – do they buy on diversification rumours or sell on US interest rate expectations.

When the single currency was exploring the upside in European morning trade yesterday, talk about China’s Statistics Bureau’s call for the diversification of reserves sounded like a plausible reason to buy. Despite these types of calls not being new, one is also not that sure to what extent they can influence FX policy. Moreover, the probability is rather high that there would always be somebody somewhere calling for the diversification of reserves as it is continuously under consideration by different central banks. Nevertheless, with the market looking for clues about the future of US rate hikes, the better than expected consumer confidence number yesterday just provided those who wanted to sell the euro with a reason to do so. Not only was the market looking for fresh impetus, but with the expectation having been much lower this was probably even perceived more strongly. In this respect, a result in line with the expectation would have also probably been enough to see the euro tumbling, particularly against the backdrop of the higher 10 year treasury yields and some traders being jittery about today’s German IFO number.

The euro is neutral following the knee-jerk sell-off which undercut our 1.2610 risk-limit. To the downside, we expect to come across demand points at 1.2520 and thereafter only at 1.2385. Overhead, supply lurks at 1.2650.

USD JPY (117.05)
Also here the PBoC story caught the attention with some traders getting all excited. In addition, the BoJ’s Suda also cautioned about the BoJ policy being ‘behind the curve’ and put the idea of a BoJ rate hike later this year back on the agenda. However, traders wanted to buy the dollar and simply ignored any yen positive news. Instead, they preferred to focus on rate expectations and the auctions of US debt today and tomorrow which they believe will lure in some dollars and will keep it buoyant. The dollar recovered in the afternoon on the back of the US data release and remains neutral and stable. On the upside, be on the lookout for some hurdles at 117.85 and 118.30 which is, however, the current risk. For today we envisage supports at 116.50 and at 115.50/60.

EUR JPY (147.25)
The single currency still finds itself full of vigour and it remains eager to drive to new record levels. We expect that the next upside attempt could stretch to 148.30 after which it should be well on its way to the even loftier 149.30. Any move down should run into support in the 146.50/70 zone. At the last mentioned point we would again opt for a bullish strategy with a tight limit. We still earmark the second resistance to serve as target in the event of a positive orientation. For the time being critical support is visible at 145.50.

EUR GBP (0.6830)
Our objective remains 0.6730. The cross showed some buoyancy, but without any meaningful recovery attempt. Further weakness can count on some buying interest at 0.6800. On a bounce our 0.6860 risk-limit to the bearish orientation should not be violated.

GBP USD (1.8415)
With news flow in the UK rather on the thin side, Sterling slipped along with the EUR/USD and appears to be in a vulnerable position this morning. The current objective is a return to 1.8185. Any move down could expect intermediate buying interest at 1.8325. The limit to the bearish orientation must be kept tight at 1.8485/90.

AUD USD (0.7560)
It seems as if Australian CPI data this morning just further fuelled expectations of a RBA rate hike, but the AUD remains shy ahead of our 0.7570/75 resistance. Beyond there, the upside is open for gains to 0.7670. The latter could even be treated as a target while 0.7530 is not undercut after that.

Med-term traders trade the range successfully

EUR USD (1.2640)
The single currency was not in a position to deliver any spectacular move yesterday. Instead, it just hovered above the $1.26 level for most of the day. With hardly any economic releases and almost no fresh news, market participants found themselves just facing old stories again. With the dollar initially a tad stronger in the European session yesterday, some simply argued that the gains could be ascribed to short covering ahead of US data release and that the market over-reacted to the Bernanke statement. Others were talking about a settlement in the Middle East in the light of the Rice visit to the region. The latter does not make sense at all in the light of the ‘save -haven’ argument – it means the ‘prospect’ of peace would encourage dollar buying while the intensified conflict would do exactly the same.

In addition, with the euro holding above the $1.26 level, ‘semi official’ buying was also sighted as providing the single currency with support. Nevertheless, our latest EUR-Sentiment survey showed that the medium-term market participants chased the single currency higher over last week. Some bought around the lows and these traders are now also sitting on some profits. For the moment we can expect to see more range trading from this segment of the market. In addition, they would need a significant move outside the range before they will act and it is hard to imagine that they would sell before $1.28 or bail out before the mid $1.23 level.

We still maintain our bullish outlook for the euro for target 1.2845 (marginally adjusted). Intermediate resistance is visible at 1.2765. As mentioned already yesterday, the positive orientation can only stand small corrections and therefore 1.2610 serves as the extremely tight limit.

USD JPY (116.70)
Yesterday’s difficulty with information fatigue also appeared here as traders continued to talk about Friday’s expected revaluation of the yuan, which did not happen and the unwinding of long yen positions therafter, which is old news by now. Of note is that there is still a strong perception in the market that a yuan revaluation would boost the yen, however, there are also those who look at what happened when the yuan was initially revalued and reckon that the impact will be short-lived. The dollar moved beyond our 116.70 tight limit (practically the level where we previously opened the position) and must therefore be treated as neutral. Of note is that support improved at 115.50/60, where we would try a bullish strategy again with a tight limit. Critical demand stands at 114.20. Overhead, we expect supply points at 117.50 and thereafter at 118.30.

EUR JPY (147.45)
The single currency is still in a position to push ahead to even loftier levels than what we have seen this far. The next upside attempt could reach the 148.30 level after which it should head as high as 149.25. To the downside, we envisage support in the 146.50/70 zone, where we would opt for a bullish strategy again with a tight limit. As mentioned yesterday, the second resistance will then kick in as a target. For today, we reckon with critical support at 145.45.

EUR GBP (0.6840)
Our current target remains 0.6730. Nothing much has changed for the cross and it just continued its sluggish crawl to the downside. Any subsequent move down can count on support at 0.6805. On a bounce our 0.6860 risk-limit to the bearish orientation should under no circumstances be violated.

GBP USD (1.8500)
Although the market is still geared for a BoE rate hike in August, the Pound slipped below our tight 1.8470 limit this morning (which also basically represented the level where we opened the position). We re-adjusted the position to neutral thereafter. On the upside, we expect supply lurking at 1.8630/40. Only a break beyond the latter would signal further gains (1.8775). For the time being we anticipate demand at 1.8440 and 1.8325.

AUD USD (0.7560)
The Aussie shrugged of the fall in the Australian business index this morning and is well underway to 0.7570, which represents the best near-term resistance for the moment. Beyond there, we can expect to see gains to 0.7650. The latter could even be treated as a target while 0.7550 is not undercut after that. In the meanwhile the closest support is visible at 0.7520.

Traders struggle to explain dollar weakness

EUR USD (1.2640)
The single currency continued its upside stroll on Friday and even peaked at 1.2715 in Australian session this morning. However, some short-term traders took their chances at playing it from the short side, which pushed it down to the current levels.

With no US data releases due on Friday and the Bernanke testimony also slowly starting to fade, many market participants had to seriously sit down and look at the consequences of a pause in the Fed’s tightening cycle. Traders were clearly taken aback by the dollar’s performance last week at a time when they thought they had it all figured out. Not only did they have to look at the possibilities of where the Fed will go next, but they also had to find some buying arguments for the euro. In this instance, one could hear murmurs that went beyond just a pause in the tightening cycle, but of rates actually coming down in the US. There was no mention of a rapid reversal, but it is clear that some dream about lower interest rates although this is rather unrealistic under the current conditions. Even though concerns about the US trade deficit have already been raised, traders went further and emphasised that it would just compound the structural problems, particularly against the backdrop of lower interest rates. With dampened interest rate expectations haunting the dollar, it is highly likely that traders will be very sensitive to any upside surprises over the coming weeks.

This morning’s setback afforded us the opportunity to establish a bullish orientation for target 1.2865. However, any dip should not violate our 1.2610/20 limit to the positive orientation, as below there demand becomes unreliable.

USD JPY (116.60)
The current objective remains at 115.10 and thereafter at 113.60. The yen was initially in demand again on Friday as traders jumped in and bought it. While doing it, the possibility of a revaluation of the yuan fitted in perfectly with the idea of a stronger yen. For many the first anniversary of the renminbi and a scheduled PBoC press conference automatically meant that another change was in the pipeline. However, when their expectations were not met traders considered it as a welcome opportunity to buy the weak dollar, but they had to throw these positions out ahead of the weekend. This selling pushed it to a 115.85 low on Friday. For risk reward consideration we lower the limit of the bearish orientation to 116.70. We expect the dollar to even achieve stability once above there.

EUR JPY (147.55)
The cross still hovers around its recent record high at 147.90. For the time being, the position remains stable and another upside attempt to 148.30 is possible at any time, after which we could even see it as high as 149.20. To the downside, we expect to run into support in the 146.50/70 zone, where we would try to adopt a bullish stance with a tight limit, and use the second resistance as target. A critical demand point stands at 145.45.

EUR GBP (0.6825)
Our current target remains 0.6730. The single currency experienced a rather quiet day on Friday in which it only slowly drifted lower. For today, any further weakness can rely on support at 0.6805. A change in direction should not violate our tightened 0.6860 risk-limit to the bearish orientation.

GBP USD (1.8530)
The current objective remains 1.8605/15 and thereafter 1.8775. In the UK Friday’s quarterly GDP showed that it grew at the fastest pace in two years. With the focus back on interest rates this just added to the belief that the BoE will also hike rates in August and Cable just followed the news up. We tighten the risk-limit to 1.8470 for today. Additional demand is visible at 1.8325.

AUD USD (0.7515)
The jump in Q2 PPI just further confirmed for many that a RBA rate hike is due in August. For the moment a bullish strategy is not feasible due to risk-reward considerations, but the position remains stable with upside potential to 0.7570, which represents the best near-term resistance for the moment. Beyond there we can expect to see 0.7635/40. To the downside, we anticipate running into demand at 0.7465 while 0.7405 is critical.

Bernanke is not Greenspan

EUR USD (1.2645)
Yesterday proved to have been the calm after the storm for the single currency. From the start of the European session on Thursday right into the FE this morning it ended up just floating around in a tight range, just below the mid $1.26 level.

For most of Thursday, the Bernanke words were still hanging like a cloud over the market, and traders found themselves just mulling over everything. In a way the dynamics of the Fed Chair’s testimony somehow created the impression that traders thought they were still dealing with Alan Greenspan where finding a clue in a message was an art on its own. It seems as if traders still need to come to terms with the idea that they do not need to go into semantics with Bernanke, but that they should rather focus on the economic data on which the Fed bases its decisions. Nevertheless, as the market participants were still digesting the future of Fed rate hikes they also had to come up with reasons to justify their euro buying. In this regard they even warmed up to the Fed Chief as they reckoned that he showed some ‘sensitivity’ towards emerging markets. Some even went so far as to say that he used the right words at the right to time to ‘save’ the emerging markets from a further melt down. Curiously, the stronger euro also brought concerns about the twin deficit to the forefront. Just a week ago when the dollar bull run was still intact traders referred to the capital inflows data, which easily covered the deficit and to the ongoing crisis in the Middle east.

While it stays above 1.2585, the euro remains in a neutral, but stable position. This also marks the first support ahead of 1.2490 (critical). To the upside, a break beyond 1.2665/70 would unleash further gains towards 1.2865.

USD JPY (116.80)
The current objective remains at 115.10 and thereafter at 113.60. The future of Fed rate hikes was also at the centre of the attention here yesterday. With a gloomy outlook what rate hikes are concerned in both countries, traders preferred to put more weight on the Fed Chair’s testimony. Both the latest BoJ minutes which drew attention to a change in monetary policy at a time when the economy is not that strong, and the OECD warning against rate hikes in Japan were largely shrugged off. The dollar just slipped back into its former consolidation, which raised the possibility that the recent strength was nothing but an upside false-break . Our bearish orientation, however, can only deal with minor corrections and for this reason our risk-limit is set tight at 117.10. Overhead, we expect to come across a stumbling block at 118.30.

EUR JPY (147.75)
The single currency explored the upside potential planned for it at 147.70 and swiftly moved beyond to fresh historical highs yesterday. The cross still appears to be full of life and we expect the upside strength to continue and to extent to 148.25 next. After the last mentioned point, the upside remains open for it to even push to 149.20, however, this marks the spot where a correction might be due. One can expect to run into supports at 146.75 and thereafter at 145.40 (critical).

EUR GBP (0.6840)
The current objective remains 0.6730. Nothing much has changed for the single currency and it just traded in a tight range yesterday. To the downside, we count on support at 0.6815/20. Any move up should not violate our 0.6875 risk-limit to the bearish orientation.

GBP USD (1.8495)
Yesterday’s rise in retail sales, mortgage lending and money supply in the UK got some traders all excited again and even boosted the expectation for a rate hike in August. With yesterday’s break beyond 1.8475, Cable has achieved short-term stability. This has now opened the door for further modest gains to 1.8610 and thereafter to 1.8775. The bullish orientation, however, can only stand small corrections and for risk-reward considerations, the limit must be set tight to 1.8425/35. Additional support comes in at 1.8325 for today.

AUD USD (0.7495)
Traders seemed to be caught between as sharp fall in metals and the prospect of a RBA rate hike expected for next month. The position is neutral and stable with upside potential to 0.7570, which represents the best near-term resistance for the moment. Beyond there we can expect to see 0.7635. We anticipate running into demand at 0.7465 while 0.7405 is critical.

Bernanke spoils pumped-up expectations

EUR USD (1.2610)
What initially looked like a quiet trading day quickly changed when the euro turned the corner in the NY session. First it hit a fresh low before it got out of the blocks and rallied straight up to almost 1.2620. With the single currency having hit a 12 week low early in the NY session, it is rather unlikely that there were many short positions in the market. But when the tide changed, it did indeed look like a squeeze with some fresh positions hoisting the single currency to where it was at the start of the week. With the market back in interest rate watching mode, the first sign of the day that signalled the possibility of a Fed rate hike sent the euro straight down. In this respect yesterday’s higher than expected US CPI core reading was more than enough to further pump up expectations.

In addition, the week started off looking rather grim for the euro – it was close to the recent lows, turmoil in the Middle East and strong US inflation data. Traders were yesterday just waiting for the Fed Chair to play his hawkish trump card to complete a perfect dollar bullish tale. It is clear that the fuelling of expectations just meant that the reference point was set very high as there was even talk that it is time for Bernanke to ‘set the record straight’ with some hawkish comments. The Fed Chief did indeed set the record straight, but it was not what many traders wanted to hear. Of note is that the Fed is still sticking to what we have already heard before – monetary policy will depend on economic data, but the comments clearly cooled expectations for an August rate hike.

Despite yesterday’s recovery, the euro remains in a neutral position. Overhead, the first hurdle is visible at 1.2665/70. Once it is cleared, however, we reckon with further gains up to 1.2865. Critical support is visible at 1.2490.

USD JPY (116.70)
The dollar hit a fresh three month high against the yen with its recovery to 118.00. The Japanese Government yesterday removed the reference to deflation from its monthly economic report, without declaring an end to deflation, which could have been a disappointment in the light of the US rate hike talks having reached fever pitch. But in the wake of the Bernanke address the dollar slumped to 116.55. For riskreward consideration we retreat from our bullish stance and even now believe that the risk is rather for further weakness to 115.10 and thereafter to 113.60. These levels could even be treated as targets while the dollar does not breach the 117.10 level again.

EUR JPY (147.10)
The cross still remains buoyant and we continue to look for fresh highs at 147.70 and thereafter to 148.60, which also mark the next reliable resistances. Because of the low number of wrong positions here, we hardly see any extravagant moves and it also explains why subsequent highs are just a dash higher than the previous ones. To the downside one can expect to come across the first support at 145.90 while 144.90 marks the critical demand point.

EUR GBP (0.6835)
The current objective remains 0.6730. For the time being intermediate support comes into play at 0.6815/20. On a bounce, the 0.6875 risk-limit to our bearish orientation should not be violated.

GBP USD (1.8450)
The knee-jerk reaction was to sell Sterling after the BoE minutes showed a unanimous vote to keep interest rates on hold even though this was expected. However, soon market participants simply fell back on the old inflation figures of the day before and decided that a rate hike is indeed somewhere on the horizon. The subsequent buying interest meant that cable jumped beyond our 1.8345/50 limit yesterday (apologies). This morning it is fighting with 1.8475, which also marks the short-term point for stability. Beyond there, initial gains to 1.8610 could be in the pipeline. Supports are visible at 1.8325 and at 1.8230 (critical).

AUD USD (0.7505)
Yesterday’s break below 0.7445/50 resulted in limited weakness to 0.7405 only, before the AUD quickly reversed direction again. The position is neutral this morning with upside potential to 0.7570, which represents the only reliable near-term resistance for the moment. The latter will be the gatekeeper for an even stronger recovery (0.7635). Expect demand at 0.7465 while 0.7405 is critical.

USD: Focus shifts from Middle East to Bernanke

EUR USD (1.2495)
The European mid-morning on Tuesday brought with it a brief sell-off, which sent the single currency straight through the $1.25 ‘psychological’ barrier. With the euro optically cheap it is hard to imagine that traders would have tried it from the short side. Instead, it provided the ideal opportunity for dip-buyers to jump in, which saw the single currency recovering up to 1.2560. However, after a bit of churning it finally slumped to 1.2475. Yesterday’s German ZEW investor confidence number, which came in far below expectation, provided those who wanted to cut back on short dollar positions with a reason to do exactly that. In addition, it seems that against the backdrop of hawkish ECB comments and expectations for a eurozone rate hike that traders are sensitive to data that comes in below expectation.

Nevertheless, the market movements left the impression that traders did not really know what to do with the euro yesterday as it stayed relatively buoyant on lower levels. Even if tension in the Middle East were to escalate, traders perceive the developments with shrinking sensitivity. In this respect it had already lost its number one spot yesterday as market participants started to focus on economic data. However, both the strong US producer price inflation and capital flows data were also not really able to move the market. It was already clear at the start of the week that traders are far more interested in Bernanke’s semi-annual monetary policy report. Of interest is what he has to say about the future of interest rates, particularly as the expectation for a Fed hike diminished with only 65 per cent expecting a hike in August.

The outlook for the euro remains unchanged for today with the current risk still being a setback to 1.2410 or even to 1.2360/70. We would adopt a bullish strategy at the former with a limit below the latter. If a positive orientation is triggered the target will be an upturn to 1.2665.

USD JPY (117.40)
The second objective remains at 118.50. On the news front it proved to be a rather quiet day as far as the yen was concerned. However, it seems as if the unwinding of long yen positions are just continuing in the wake of a slower than expected pace of rate hikes by the BoJ. In the light of this, the dollar continued its upward stroll and peaked almost at 117.60 yesterday. For today we expect that any further upward attempt will run into an intermediate hurdle at 117.90. In the event of a dip, our tightened 116.50 risklimit to the bullish orientation should not be violated. To the downside, we reckon with critical support at 115.10.

EUR JPY (146.70)
The cross still remains full of vigour and we continue to look for fresh highs at 147.70 and thereafter to 148.60, which also mark the next reliable resistances. Any sign of weakness could expect supports at 146.00/20 and at then at 144.75 (critical). The first mentioned point is again the entry level for a bullish strategy with a tight limit below. In the event that a positive strategy kicks in, the second resistance will then represent the target.

EUR GBP (0.6850)
The single currency slipped below its best support at 0.6860/70 (apologies) and has opened the door for further weakness to 0.6790 or even to 0.6730. Overhead resistances are visible at 0.6875 and at 0.6910. With the first resistance as a limit, the second support could even be treated as a target.

GBP USD (1.8255)
The current objective remains 1.7930. Housing data that came in above expectation together with an increase in UK inflation provided those traders who wanted to buy Sterling with a reason to do so. It is clear that for many this just put the possibility of a BoE rate hike back on the table. Intermediate support comes in at 1.8040 for the time being. The limit within the bearish orientation remains tight at 1.8345/50. Cable will only achieve short -term stability beyond 1.8475.

AUD USD (0.7450)
Despite a report on a healthy economic outlook for May, traders seemed to be more interested in commodity prices. The AUD continues fighting with the 0.7445/50 support. Below this point, the demand situation would become flimsy which could result in a setback to 0.7360. To the upside, be on the lookout for supply at 0.7490 and at 0.7530.

Dollar attracts ‘safe haven’ buyers

EUR USD (1.2530)
The start of the European session on Monday saw the single currency being dropped like a hot potato. By lunch time it had already been a big figure down and in NY it almost hit the ’psychological’ $1.25 level. With geopolitical concerns in the Middle East already on traders’ minds for more than a week, the ‘safe haven’ value of the dollar was again at the forefront. It is clear that events that are more ‘visible’ and regularly repeated on television tend to leave a bigger impression and are also readily available for traders to recall. Some analysts were even drawing the attention to the fact that the flight-to-safety effect is more inclined to occur when the market is already caught in a bearish view, in this case, for the euro. According to this belief, the market’s reaction could therefore end up being more position driven and is also linked to the source of the shock.

Nevertheless, the euro could again not muster any support yesterday from economic data. It seems as if the short -term crowd is waiting for the dollar to settle before they do anything. Thus, with hardly any short -term demand and the market struggling to digest the supply, our latest EUR-Sentiment Survey* confirmed that medium-term market participants have also not really been the ones to blame for the euro’s recent wave of weakness. It is, however, true that some took advantage of the range, but for now they are probably waiting to see even lower rates than the mid-June 1.2485 low before they would act.

Moreover, with optimism a dash stronger while the euro is much lower, it simply confirms that a long-term player is indeed prominent on the selling side. The single currency even slipped deeper into its previous sideways range yesterday and the current risk is for a further setback to 1.2410 or even to 1.2360/70. We would opt for a bullish strategy at the first point with the limit below the last. In the event of a positive orientation, the target will be a recovery 1.2665.

USD JPY (116.95)
Objective achieved. With the dollar having finally exited even its former consolidation (113.45 - 116.70) to the upside, this move has also now cleared the way for further gains to our second 118.50 target. The dollar surged to a three month high against the yen as geopolitical concerns and the flight to-safety value of the currency are still the attention grabbers. For today, we reckon with intermediate resistance at 117.85. To the downside, we are counting on demand at 116.30/40, which is also the sharply tightened limit. Below this support, the risk would increase that the recent strength has been nothing but a false-break.

EUR JPY (146.55)
The cross is still full of zest and remains in a position to deliver fresh highs at 147.70 and thereafter to as high as 148.60, which also mark the next reliable resistances. Any weakness will run into supports at 146.10/20 and at then at 144.80. The former marks the entry level for a bullish strategy with a tight limit. In the event of a positive orientation the second resistance acts as a target.

EUR GBP (0.6880)
The outlook remains the same. To the downside expect support at 0.6860/70. This also indicates the spot where we would turn bullish with a tight limit. However, below there, the demand situation becomes flimsy ahead of 0.6730. Overhead, we expect bouts of selling at 0.6920 and at 0.6965. The latter also marks the objective in the event of a bullish strategy.

GBP USD (1.8205)
Sterling slipped below its best support at 1.8275/90 and as mentioned yesterday, has opened the door for further weakness to 1.7930, also the current objective. Intermediate support can only be expected at 1.8015. The limit within the bearish orientation must be set tight to 1.8345/50.

AUD USD (0.7490)
The AUD pulled away from its recent highs, but it remains overall in a neutral position. On a dip, expect to come across support at 0.7445/50. Below this point, the demand situation would deteriorate and result in a setback to 0.7360. Overhead, supply is lurking at 0.7510 and at 0.7565. The latter must still be overtaken for a bullish resolution

Dollar shrugs off negative news

EUR USD (1.2625)
The single currency was already under pressure in the early European morning session on Friday. However, later it managed to briefly rush almost to the $1.27 level from where it was sent straight down to a 1.2625 fresh low for the month.

The euro’s drift lower on the last trading day of the week took place in the absence of negative news. Of note is that the geopolitical concerns used by market participants to buy the euro the day before, was used as a selling argument on Friday. As traders started scratching their heads to make sense of it all, the dollar bulls seemed not to have been too concerned about the skyrocketing price of crude. The stepped up attacks by Israel on Lebanon were also seen as part of safe haven flows rather than as a threat to the US. Even economic data from the US which came in rather on the weak side lost its punch. The knee-jerk reaction was to buy the single currency on the weaker retail sales, but soon afterwards the upside attempt ran out of steam. In addition, the dip in expectations for another Fed hike after the release of the softer retail number and the weaker University of Michigan survey could not change things around for the euro. However, the steady loss over the whole of last week, could indeed point to some truth in the rumours about official selling.

After the single currency’s dip below our 1.2660 risk-limit, we re-adjust the position to neutral. For today we reckon with risk to 1.2545 (critical), while a recovery will meet resistance at 1.2710.

USD JPY (116.40)
The current objective remains a return to the upper border of the current range (113.45 - 116.70). Be on the lookout for our second target thereafter at 118.50. The yen could hardly muster support from the BoJ rate hike on Friday, instead it hit a five-week low against the dollar as traders started to become concerned that this could have been the first and last rate hike for the year. This is hardly anything new as there has been talk all along that a slow pace would follow the first hike. Nevertheless, for the time being traders seem to be much more interested in the BoJ rhetoric, economic growth and inflation. With Japan being out on a public holiday today, one can also expect volumes to be rather on the thin side. To the downside, we are counting on two demand points at 115.50 and at 115.00. The first support also acts as our tightened risk-limit.

EUR JPY (147.05)
The euro remains agile and is still in a position to deliver fresh all-time highs at 147.70 and thereafter to as high as 148.60, which also mark the next reliable resistances. On a dip, we expect to run into support at 146.10 and at then at the critical 145.00 level.

EUR GBP (0.6880)
The cross continued its downward correction on Friday. Any subsequent persistence to the downside will encounter support at 0.6860/70. This also marks the point where we would turn bullish with a tight limit below. Of note is that below there, the demand situation becomes unreliable ahead of 0.6730. Overhead, we expect bouts of selling at 0.6920 and at 0.6965. The latter also marks the objective in the event of a bullish strategy.

GBP USD (1.8370)
Sterling could still not manage to escape Wednesday’s range and it remains overall in a neutral, but stable position. On the upside, we are still requiring a break beyond 1.8520, which will also serve as a sign that that another immediate challenge of 1.8775 is underway. Any weakness will run into some buying interest at 1.8275/90 with the latter also representing the best support. Below there, the risk would be for 1.7930.

AUD USD (0.7515)
Traders still subscribe to the idea that the RBA will be the next central bank to hike rates. The Aussie recovered and remains overall in a neutral position. Beyond 0.7565, one can reckon with another squeeze being underway, which will lift the AUD to 0.7605 and thereafter to 0.7650. On a dip, supports are visible at 0.7485 and 0.7445.

JPY: Buy the rumour, sell the fact

EUR USD (1.2680)
Trading turned out to be rather quiet yesterday with the single currency mostly churning around the $1.27 level. Later on in NY it briefly dipped to 1.2665 before some demand lifted it off the lows again.

With the BoJ interest rate decision due today, traders seemed to have been far more interested in that yesterday. Besides, with still no major data releases having been on the agenda to steer the single currency in any direction, traders preferred to already start looking ahead to today’s and next week’s calendar. With the euro just hovering around, market participants also did not bother too much about finding a reason for its dip in the morning, but when they started buying it around the two-week low they pulled out the one reason after the other to justify their decisions. First on the list was the high oil price, followed by what looks like the market’s new favourite ‘geopolitical’ concerns, including a reported attack on an oil pipeline in Nigeria, the conflict between Israel and Hizbollah in Lebanon and continued concerns about the nuclear situation in Iran. One would have expected a much bigger move in the euro had these issues really driven the market, but it is hard to believe that all of this was behind a sluggish 30 pip move. It rather appears as if traders simply do not know what to do with the single currency at the moment or else they are convinced about their current positions.

Our target remains 1.2930/40. On a dip, the single currency should not violate our tight 1.2660 risk-limit to the bullish orientation. Below there the support situation becomes unreliable (1.2585-1.2395/05).

USD JPY (115.90)
The current objective remains a return to the upper threshold of the current consolidation (113.45 - 116.70). Once the target is achieved, we even reckon with an accelerated move up to 118.50. As the yen fell out of favour in the run up to the BoJ interest rate decision, the market immediately turned to the oil price. But it looks like it has been more of a ‘buy the rumour sell the fact’ situation as traders were already talking about the yen slide if the BoJ matches rate expectations. This morning’s 25 bp hike was in line and the central bank indicated that it will keep it at low levels for the time being and that a second hike is not on the cards for now. Nevertheless, the dollar just extended its gains after it had achieved stability yesterday and even managed a 116.10 high thus far. We expect to come across supports at 115.50 and at 115.00. The last mentioned demand point also represents the tighter limit within the positive orientation.

EUR JPY (146.90)
The single currency’s advance came within a whisker of its recent peak, which also marks the highest level on record achieved thus far. Nevertheless, today’s break beyond 146.75 should have injected the euro with the necessary vigour to continue to even loftier levels at 147.90 and thereafter ultimately to as high as 148.80, which is also the current upside potential. On a dip, we can count on buying interest at 145.70 and thereafter at 145.00 (critical).

EUR GBP (0.6890)
The cross continued edging lower yesterday and the position remains neutral for the time being. To the downside, we expect support in the 0.6850/65 zone. This also marks the point where we would turn bullish with a tight limit below. Be on the lookout for rounds of selling at 0.6930 and thereafter at 0.6980.

GBP USD (1.8415)
Despite the appointment of Andrew Sentence, who is believed to be more of a dove than a hawk, Sterling continues to move within in Wednesday’s range and remains overall in a neutral, but stable position. Overhead, we are still requiring a break beyond 1.8520, which will signal that another immediate upward attempt to 1.8575 is underway. To the downside, we are expecting to run into supports at 1.8335 and 1.8270. The latter is critical.

AUD USD (0.7485)
The Aussie slipped below our tightened 0.7500 limit, which threw us out of our immediate bullish orientation (albeit profitably). Support is thin thereafter ahead of 0.7440 and 0.7400. Resistance improved at 0.7540. We require a break of 0.7565 for the AUD to continue immediately upwards.

Old Government mantra forces JPY selling

EUR USD (1.2710)
The European trading day on Wednesday saw the single currency slowly making its way to the downside. It is likely that some stops were triggered which even saw it hitting a 1.2675 low before recovering back to the current levels in the FE this morning.

Apart from the US trade deficit having been the only significant item on the agenda, yesterday was yet again a thin day as far as economic data releases were concerned. On the announcement of the trade gap the single currency was already on its way lower, and the narrower-than-expected deficit just provided some market participants, who had in any event decided to sell the euro, with an argument to do so. Even though the figure was better than the expectation, it still widened and raised eyebrows in some corners. In this respect it is also worth mentioning that forecasts also act as an anchor value in the market place. This then runs the danger that traders could attach too much value to it and in the end the predicted number stands a chance to even overshadow the actual one. Nevertheless, with long-term demand for the euro being a readily available argument, the first sign of a recovery was immediately ascribed to a ‘supranational name’ being on the bid. However, it could very well be that medium-term traders* are actually scooping up some euros at the current levels.

Yesterday’s dip down to 1.2690 allowed us to enter into a bullish strategy with the objective set at 1.2930/40. As already mentioned, the risk-limit must be kept tight at 1.2660, which also marks the last good near-term support on the way down.

USD JPY (115.45)
As traders were taking profits on their long yen positions, it dawned on them that the rate hike could be less than 25bp. However, this idea has already been in the market for most of the week and some analysts even argued that a hike less than 25bp might raise questions about the extent of the Japanese economic recovery. Another piece of old news that sounded plausible to sell the yen on, was the Japanese Finance Minister, who again questioned the deflation situation and reiterated the view that it could be too early to end zero interest rates. Nevertheless, the break beyond 115.30 provided the dollar with some additional buoyancy and it should now be on its way to the upper border of the previous consolidation between 113.45 and 116.70. Beyond there, the recovery should even continue more rapidly towards 118.50. Supports are visible at 114.70 and 114.20. The first mentioned point also marks the tight limit within the positive orientation.

EUR JPY (146.80)
The euro showed even a stronger recovery yesterday from its recent 145.00 trough and is still fighting with our 146.70/75 resistance. Once this hurdle is cleared, we can expect another push to fresh highs at 147.90 or even to as high as 148.80. To the downside, we now count on improved supports at 145.95 and thereafter at 144.70/80.

EUR GBP (0.6930)
The cross tested our initial support at 0.6895 and recovered subsequently to the current levels again. We expect to run into additional demand in the 0.6845/60 zone, where we would opt for a bullish strategy with a tight limit below. For today, supply is lurking at 0.6945 and 0.6980.

GBP USD (1.8350)
Sterling slipped and with the UK unemployment figure at the highest level since 2002, this served as a plausible reason to encourage dollar buying. For the time being, Cable remains in a neutral and stable position, but we still need a break of 1.8575/80 to signal another immediate upward attempt. Overhead, we reckon with intermediate resistance at 1.8450. To the downside, we expect supports to be left at 1.8250, which also marks the last good demand point ahead of 1.8150.

AUD USD (0.7540)
The current objective remains 0.7595. Particularly strong jobs data from Australia, which was even described as a ‘monster’ just further forced traders to jump in and cover the AUD. Beyond the objective, we already reckon with the second target at 0.7650. For today, we tighten the risk limit of our positive orientation to 0.7500.

Aussie buoyed by interest rate speculation

EUR USD (1.2760)
Last week’s low provided the single currency with some fresh demand yesterday as it edged up just ahead of the $1.27 level again. A lacklustre upside attempt in the European session could only lift it to 1.2775 where it stayed for the remainder of the NY session.

The EU Finance Ministers were up first yesterday and Luxembourg’s, Juncker, hinted that the current euro levels do not threaten exports, but that further appreciation may threaten the economy. Shortly afterwards his French counterpart more or less sung the same song. With the euro looking for some direction, and with hardly any significant economic data releases on the calendar, it had nothing else to rely on but these stale comments from EU officials that did not help it in any way. However, with the first uptick in the euro, traders could simply not resist to fall back on their favourite argument – diversification. This time Syria announced that it would end its dollar peg by the end of December to reflect closer trade links with Europe. It also added that it had already changed half of its approximate $4.1bn reserves into euros.
Apart from the fact that this does not leave it with a lot more to convert, this line of reason is simply an old one.

For many market participants, this argument was just available and they even went a step further to link it with the possibility of diversification in other Gulf states. In addition, this is also viewed as part of a bigger plan ahead of the launch of a planned single currency in 2010. Traders seem to forget that if all of this is true, it is still a couple of years away that is if the whole process runs on schedule.

For today we retain our outlook for the euro and would turn bullish at 1.2690 for a 1.2930/40 objective. We keep the risk-limit relatively tight at 1.2660 thereafter. The latter again marks the last good near-term support.


USD JPY (114.35)
The market is still awash with talk about the BoJ rate hike expected on Friday. However as traders sold the yen yesterday, they started to take a rather pessimistic view on the size of the rate hike, with many now looking for something between 10 and 15bp. In addition, they were also quick to turn to geopolitical risk and even singled out Koizumi’s call for a quick decision on sanctions against North Korea as limiting the yen gains. However, with no new turn on the issue it is hard to believe that this is the case.

The dollar is currently consolidating between 113.45 and 116.70. A break of the lower threshold would encounter supports at 113.10 and 112.75. We still subscribe to a bullish strategy at the first mentioned point with a limit below the latter. Resistance is visible at 114.90 and beyond the 115.30 supply point the recent downward correction should have run its cause. This could see the dollar appreciating further than the upper threshold.

EUR JPY (145.95)
The cross received some temporary support ahead of 145.00. So far the recovery was not convincing and the position has not stabilised yet. To the downside, we reckon with supports at 144.70 and 144.10, which also mark the current risk. Overhead, be on the lookout for resistance at 146.70/75, beyond which another attempt to fresh highs at 147.90 would be likely.

EUR GBP (0.6920)
The single currency remains in a neutral position. We expect to run into downside supports at 0.6895 and then at 0.6845/60. We would still take advantage of a bullish strategy at the latter with a tight limit below. Be on the lookout again for resistances at 0.6945 and 0.6980.

GBP USD (1.8450)
Sterling recovered after the announcement yesterday that the UK’s deficit had widened. For the moment it still remains in a neutral and stable position. To the downside, we expect to come across some buying interest at 1.8350 and thereafter at 1.8275. However, we still need a break of 1.8575/80 to signal immediate upward continuation towards 1.8775.

AUD USD (0.7540)
The current target remains 0.7595. The Aussie remains buoyant as the latest consumer confidence number has put the possibility of another RBA rate hike on the table. Beyond the objective, one can already look for 0.7650. We expect to come across support at 0.7505. On a dip our tightened 0.7470 risk-limit should not be violated.

Yen: Late wake-up to rate differentials

EUR USD (1.2740)
The European session started on Monday morning with the single currency slowly continuing its drift lower to 1.2720. This happened in the absence of any fresh impetus that could send the euro in any direction. It was only, the by now old non-farms payrolls number, which was still echoing through the market. Curiously, traders applied exactly the same argument that they used as a reason to buy on Friday to sell the single currency yesterday. They already started shifting the attention on Friday afternoon to the hourly earnings, which could signal a continuation of the Fed tightening cycle to keep inflation under control.

Nevertheless, the reluctance of the medium-term crowd to do anything last week hinted that short-term traders were largely the ones who participated in the euro’s rally. Despite the single currency having gained two per cent over the course of the last week, our latest Euro-Sentiment Survey* revealed no change in the level of optimism. Only a meagre one per cent shift from the unchanged camp into the bullish and bearish camps respectively. This also
implies that the outlook for the euro has not changed much either. We can now only expect good demand from medium-term market participants beyond
$1.30. At the lower end, a one per cent dip is more than likely necessary to attract some profit-taking. In addition, long-term bids are also expected to reappear on lower levels again.

Although yesterday’s euro weakness was sturdier than expected, it does not justify an overall bearish outlook. For this reason, we would try a bullish strategy at 1.2690 for an objective at 1.2930/40. The risk-limit will then be relatively tight at 1.2660/70. The latter also marks the last good near-term support.

USD JPY (114.50)
With China’s trade surplus also having hit record highs, it convinced some market participants that the pressure is on for a stronger renminbi. In addition, with speculation still rife about Japan ending its zero interest rate policy on Friday, those who wanted to buy the yen had ample reason to do so.

These arguments also followed the yen on its way up yesterday. However, some cracks quickly appeared around the Japanese rate hike argument as the dollar changed direction. It seems as if it finally dawned on traders that a rate hike on Friday will not do much after all to close the yield gap between the two currencies.

Nevertheless, after the initial dip to 113. 45, the dollar staged a big figure recovery. But for risk-reward considerations we keep the position neutral. For today supports are visible at 113.10 and thereafter at 112.75. At the former we would implement a positive strategy with a limit below the latter. Resistances stand at 114.90 and at 115.40. In addition, a break beyond the last mentioned point would signal an immediate recovery.

EUR JPY (145.40)
The single currency retreated more than two big figures to almost 145.00 yesterday from its recent 147.40 all-time high. The cross remains unstable for the time being, with room to weaken to 144.05 and then to 142.90. On the upside, we expect to run into resistances at 146.70 and at 147.30.

EUR GBP (0.6920)
The cross continued its downswing, but it still finds itself in a neutral position. To the downside, we expect to run into supports at 0.6895 and then at 0.6855. Twenty ticks ahead of the latter, we would take advantage of a bullish strategy. Today’s supply points are located at 0.6945 and 0.6980.

GBP USD (1.8420)
In the UK producer output prices ticked up while house prices were up year-on-year in May. Cable retreated below our 1.8400/10 limit yesterday (apologies) and finds itself in neutral territory again.

To the downside, we expect to see some buying interest at 1.8350/60 and thereafter at 1.8275. Only below the second point do we anticipate that the demand situation will become thin. Overhead, supply is lurking at 1.8540. A break beyond there will signal that another upside attempt is underway towards 1.8775.

AUD USD (0.7525)
The current target remains 0.7595. The Australian business conditions index came in stronger this morning. Aussie was buoyant as some traders interpreted this as pointing to another RBA rate hike in August. On its way up, we reckon with resistance at 0.7535 and we even envisage the move to accelerate beyond there. Any dip should not violate our 0.7455 risk-limit to the bullish orientation. To the downside, additional support could be expected at 0.7430.

US Payrolls well below reference point

EUR USD (1.2790)
After a quiet European morning session on the last trading day of the week, the release of the US non-farm payrolls quickly changed the outlook for the euro. In a market where liquidity was rather on the thin side, it immediately got out of the blocks and skyrocketed to a 1.2865 peak. However, some position squaring forced it to give up all its gains and in the FE this morning it was exactly where it started.

Some short-term traders tried the euro from the long side, but this has already been the case on Thursday, particularly after the Trichet comments. However, some of these positions were sold out on the ADP estimate of a 368,000 payrolls report. No matter which way one looks at it, the number was out in the market and marked a significant shift higher in the reference point. In addition, this also served as an anchor for traders.

To give more ‘credibility’ to this number some financial institutions even adjusted their estimates accordingly. In many ways the ADP number did nothing more, but to set the market up for disappointment as it was indeed very high and anything below this, or even in line with consensus, would have been perceived as a bad number.

This is also exactly what happened when the payrolls number was released. Nevertheless, when the euro edged lower again, traders were quick to replace an outright bad employment number with what they referred to as more of a ‘mixed’ bag. The euro’s setback has afforded us the opportunity to establish a fresh bullish strategy for target 1.2935/40. To the downside, we expect to come across support at 1.2760/70, which also serves as our relatively tight risklimit.


USD JPY (113.60)
Unconfirmed rumours about the Peoples Bank of China planning an emergency meeting on Friday, served as a signal to some traders that the renminbi would be revalued again. Many market participants believe that this will automatically lead to the appreciation of Asian currencies across the board.

Nevertheless, these rumours where neither confirmed nor denied, but as traders were whetting an appetite for the yen, this did not really seem to matter. In addition, traders are still in BoJ rate hike watching mood and simply ignored the Fukui attempt on Friday to clutter the Government’s raised projections for economic growth with the North Korean issue.

Japanese machinery orders were up this morning and on the back of this the dollar dipped to 113.60. We expect the current wave of weakness to extent to 113.10 and thereafter to 112.70. These levels also mark the best downside supports. Overhead, we reckon with supply at 114.50 and at 114.90.

EUR JPY (145.40)
The cross slipped lower to 145.35 this morning. This brought it just a whisker away from one of our best support at 145.25/30 (critical). Thereafter, weakness can extend to the second demand point at 142.90. On the upside, we expect to run into resistances at 146.70 and at 147.30.

EUR GBP (0.6920)
Even though the euro is a tad lower, it still drifts around in neutral territory. Any move down, will be met by the first support at 0.6895 and then at 0.6855. For today, we reckon with supply lurking at 0.6945 and 0.6980.