Deutsche Bank

EUR USD (1.3125) With no significant data releases the scene was set for a quiet start to the week. However, from the outset it was also clear that last week’s rally did not leave the short-term crowd with much choice. They could basically only try and play the euro from the short side, which is exactly what happened when both the European and US traders came in yesterday. To this end the European Finance Ministers, who had a two-day meeting scheduled in Brussels, came to mind. This time the French Finance Minister, Breton, provided a plausible argument to sell with his call for ‘collective vigilance’ against the dollar slide. Apart from this having been just readily available, the jawboning of politicians has not managed to change the outlook for the euro so far. Of note was also how the market selectively picked to quote only those ministers who were against the euro´s strength and preferred to ignore the majority who did not view it as a problem. Nevertheless, as the short-selling did not have the desired effect and traders had to jump back in and buy the ‘in thing’ was all of a sudden to ride the trend. Some even started talking about the $1.35 being hit next, but in all honesty this level has no significance apart from being within reach of the euro’s peak. We maintain our positive outlook for the single currency for target 1.3290. To the downside, weakness is still guarded by the 1.3005 risk-limit.

USD JPY (116.10) At least some traders could find solace in the BoJ statement yesterday when Fukui mentioned that interest rates will be adjusted as the economy expands. However, this did not add anything to the knowledge pool. Equally disappointing, was the Japanese retail sales this morning, which came in better than expected, but economists still viewed it as weak. Nevertheless, yesterday’s brief up spike in the morning tested our tight risk-limit at 116.40/45. For today, we stick to our bearish outlook for target 113.50.

EUR JPY (152.40) Some short selling activity pushed the cross down a tad early in the European session yesterday, but it soon found its way back where it even pushed to another all time high. For risk-reward considerations, we are unable to implement a bullish strategy. However, one can reckon with selling interest at 152.75/80 and thereafter at the even loftier 153.85 level. On a dip we expect to run into demand at 151.35/40 and 150.30 (critical).

GBP USD (1.9380) Stronger UK housing data, which suggested that buyers were largely unfazed by the BoE rate hikes this year could only manage to leave Cable close to the recent peak. For riskreward considerations we can just implement a positive strategy on a dip down to 1.9275. In the event of the new strategy being kicked in, it would be for target 1.9600. The subsequent risk-limit would be marked by 1.9165.

AUD USD (0.7785) The current target remains at 0.7855. The Aussie fell back yesterday from its recent peak. This was in all probability the work of the short-term crowd who tried short-selling the AUD at the higher levels. Any sign of weakness should not breach our risk-limit to the bullish orientation at 0.7750.

IFR Markets

EUR/USD
Longs established overnight, after the pairing filled the gap caused by the early surge in Asia yesterday. Daily studies are overbought, but continue to point higher. The pairing is trading above the upper Bolli band at 1.3106, which is a concern for bulls, but the trend is strong and the Bolli is climbing vertically, so further gains are possible.

Resistance:
1.3315(M) Weekly High Mar 21 05 Flat On A Failure
1.3265(M) Weekly Low Mar 14 05 Flat On A Failure
1.3195(M) 2% MA Env Top Flat On A Failure
1.3180(M) Spike High Nov 27 Flat On A Failure

Support:
1.3105(M) Upper Bolli Band Buy A Bounce
1.3065(M) 1% MA Env Top Sell Stop Below
1.2935(M) 10-Day MA Line Buy A Bounce
1.2925(M) Daily Low Nov 23 Buy A Bounce, Sell Break

USD/JPY
Yesterday"s short was stopped overnight, as the price rallied to 116.40, stalling the bearish daily studies, but the primary downtrend remains in place. Our bias remains lower and our strategy is to set shorts into a 116.25 bounce, with a stop above 116.60, looking for a 115.20 test. Hourlies are at neutral levels.

Resistance:
117.75(M) Nov 20, 21 Lows Flat On A Failure
117.50(M) Nov 15, 17 Low, Cloud Base Sell A Failure, Buy Break
116.60(M) Daily High Nov 24 Sell A Failure
116.40(M) Daily High Nov 28 Sell A Failure

Support:
115.35(M) Nov 27 Low, Chnl Btm Buy A Bounce
115.20(M) Daily Low Aug 17 Sell A Break Below
114.70(M) Daily Low Aug 10, 2% Cover On A Bounce
114.00(M) Daily Low Aug 4 Cover On A Bounce

GBP/USD
The pairing retraced the weekend gap overnight, finding support at 1.9305, so we now have a tight stop below this level. Overbought daily studies continue to point higher and the up-trend is strong, so we will run with the position, looking for a significant move towards 1.9550. Hourly studies are at neutral levels and yesterday"s 1.9460 high is initial resistance.

Resistance:
1.9550(S) 12-yr High, Dec 2004 Take Profit, Buy Break
1.9505(M) Wkly High Dec 10 04 Flat On A Failure
1.9490(M) 2% MA Env Top Flat On A Failure
1.9460(M) Spike High Nov 27 Flat On A Failure

Support:
1.9305(M) Hourly Lows Nov 24, 27 Sell Stop Below
1.9180(S) Daily High Nov 10 Buy Bounce, Sell Break
1.9130(M) Daily Low Nov 23 Cover On A Bounce
1.9005(M) Daily Hi Nov 21 Cover On A Bounce

USD/CHF
Short taken overnight, after intraday support at 1.2065 gave way, with a stop beyond modest resistance at 1.2110-20. Oversold daily studies are a concern but major long-term supports were removed in the past few days and the trend is strong. Hourlies show mixed signals in neutral territory. Target is 1.1920, with 1.2005/15 initial support.

Resistance:
1.2250(M) Daily High Nov 24 Sell A Failure
1.2205(M) Nov 23 lo, Hrly Hi Nov 24 Take Profit, Sell Failure
1.2185(M) Daily Range Low Aug 21 Flat On A Failure
1.2120(M) Hourly Resistance Nov 27 Buy Stop Above

Support:
1.2030(M) Hourly Low Nov 27 Cover On A Bounce
1.2015(S) Daily Low May 22 Cover On A Bounce
1.2005(M) Daily Low May 17 Cover On A Bounce
1.1920(M) Trend Low May 15 Take Profit, Sell Break

EUR/JPY
Longs reset overnight on the pullback from 152.50, are in court in Asia. We are using a tight stop below recent hourly highs and lows in the 152.10-15 range. Our target is the medium-term channel top and 1% M/A Envelope at 153.00/05. Daily and hourly studies remain bullish with room to extend, though overbought levels are close.

Resistance:
162.40(M) Synthetic Yearly High 98
154.50(M) 2% MA Band Top Flat On A Failure
153.05(S) M-T Channel Top Sell Failure, Buy Break
153.00(M) 1% MA Env Top Take Profit

Support:
152.15(M) Hourly Support Nov 27 Sell Stop Below
151.65(M) Daily High Nov 20 Buy A Bounce
150.50(M) Daily Low Nov 24 Buy A Bounce
150.20(M) Daily Low Nov 7, 8 Buy A Bounce, Sell Break

EUR/GBP
Fourth consecutive session with higher lows, but the topside remains hemmed in at 0.6785 or so, with five of the last seven sessions showing a high near there. Dailies are slightly bullish but bullish nonetheless, so buying dips remains the plan. Keeping with the recent pattern, buy before Friday"s 0.6755 low.

Resistance:
0.6830(M) Daily High Aug 21 Stalling Expected
0.6820(M) High Sept 11, 200 M/A Flat On A Failure
0.6795(M) Daily High Nov 16 Flat On A Failure
0.6785(M) 5 Recent Daily Highs Buy Sustained Break

Support:
0.6765(M) Hourly Low Nov 27 Buy A Bounce
0.6745(M) Daily Low Nov 21,22 Buy A Bounce, Sell Break
0.6715(M) Nov 8 High, 10,13 Low Cover On A Bounce
0.6695(M) Daily Low Nov 7,8,9 Cover On A Bounce

EUR/CHF
The failure to record fresh lows yesterday has stalled the daily studies and the oversold RSI looks to be forming a base. Our bias remains lower, with the trend and our strategy is to sell a failure into the 38.2% of 1.6010/1.5810 at 1.5885, which was also the Nov 23 high. 1.5800 is key support. Hourlies are in neutral territory.

Resistance:
1.5975(M) Daily High Nov 20 Flat On A Failure
1.5910(M) Daily Low Nov 13 Sell Failure, Buy Break
1.5885(M) Nov 23 High, 38.2% Fibo Sell A Failure
1.5865(M) Oct 19, 31 Lows Expect Stalling

Support:
1.5800(M) Dly Low Sep 28, 38.2% R Sell Sustained Break
1.5755(S) Trend Low Sep 25 Cover On A Bounce
1.5715(M) Daily Low Aug 7, 8 Take Profit, Sell Break
1.5685(M) Daily Low Jul 21 Cover On A Bounce

USD/CAD
The pairing stalled just short of the 1.1300 Nov 22 low and 61.8% of 1.1175/1.1500 for the second session yesterday. The new daily downtrend looks sound, supported by falling daily studies that have plenty of room to run. Our strategy is to sell rallies into the short-term Fibo at 1.1385. Hourlies are mixed in neutral territory.

Resistance:
1.1430(M) Daily High Nov 23 Sell A Failure, Buy Break
1.1395(M) Daily Low Nov 23 Buy Stop Above
1.1385(M) Nov 22 Low, 61.8% Fibo Sell Failure, Buy Break
1.1370(M) 50% of 1.1430/1.1305 Sell A Failure

Support:
1.1300(M) Nov 13 Lo, 61.8% Sell Sustained Break
1.1285(M) 200-Day MA Line 1% Env Cover On A Bounce
1.1260(M) Daily Lows Nov 7 & 10 Cover On A Bounce
1.1215(M) Uptrend Fm Sep 1 Low Take Profits

AUD/USD
Longs reset overnight, after yesterday"s trade was stopped, with a very tight stop below the intraday low at 0.7760 to limit risk given the relatively close upside target at 0.7840, the Apr 29, 2005 peak. We will flat a failure into yesterday"s 0.7820 highs along the way. Dailies are net positive. Breakout beyond 0.7840 could trigger another major leg up.

Resistance:
0.7925(M) Daily High Mar 22 05 Flat On A Failure
0.7880(M) 2% M/A Band Flat On A Failure
0.7840(M) Daily High Apr 29 05 Buy A Break Above
0.7820(M) Hourly High Nov 27 Flat On A Failure

Support:
0.7760(M) Hourly Low Nov 27 Sell Stop Below
0.7730(M) Prior Hrly Lows Nov 23 Buy A Bounce
0.7675(M) Daily Low Nov 20 Buy A Bounce
0.7640(M) Daily Low Nov 16 Buy Bounce, Sell Break