USD continues weaker, JPY data dissapoints

Again we see the dark side of Japanese data with CPI once again lower then expected, which will likely put fears of timing to when BOJ will decide another rate hike looking ahead into 2007.

MAJOR HEADLINES – PREVIOUS SESSION
CHF

USDCHF looks to be the last of the majors that needs to "break down" through taking out key levels. We look for a break of 1.19200 to accelerate the downside and spark another leg of downside in USD/Majors. We though that today's SZ GBP Q3 data could be the spark, but it cam out at a disappointing 0.4% versus 0.7% expected. We still believe that a firmer CHF is the outlook which will support the current volatility as market will start focusing on global imbalances and current account deficits, which the CHF doing very well in this sort of trading environment. The break of 1.1920 gives scope for a 1.1500 target in USDCHF and 1.3480 in EURUSD.

JPY

USDJPY found some support in late Asian trading, after the lower than expected CPI for November. This leaves the market uncertain to when BOJ will decide to once again to move on rates. USDJPY is presently trading above 116.00, but will look to short the pair if spot moves lower then 115.40 which has been test 3 time´s, which should lead to some unwinding of carry trades. but this is definitely a pair to keep an eye on as it is where we still find substantial amount of investors being long dollars. We closed our long EURJPY call strike 150.00 with expiry January 5th by selling spot at 153.86 as the pair looks set for some downside correction looking 2-3 weeks ahead.

Euro/US Dollar    

EURUSD  (1.3243 @ 08:52 GMT)

Support:

1. 1.2980 uper end of 6-month range

2.  1.2765 key support for rising wave lows.

3.  1.2460 daily base support

Resistance:

1.  1.3175 upper bull trend channel from March 2006.

2.  1.3480 old top from March 2005.

3.  1.3667 highs from 2005.

 Resist.

1.3487

1.3353

1.3298

1.3243

1.3164

1.3086

1.2952

Support

British Pound/US Dollar    

GBPUSD  (1.9686 @ 08:52 GMT)

Support:

1.  1.9175 outside weeky bar from June 2006.

2.  1.8950 wave lows from late November 2006.

3.  1.8500-20 lower end of the daily range.

Resistance:

1.  1.9550 highs from december 2004.

 Resist.

2.0109

1.9855

1.9756

1.9686

1.9503

1.9348

1.9095

Support

US Dollar/Japanese Yen    

USDJPY  (116.19 @ 08:52 GMT)

Support:

1.  115.55 wave low from April (key level as it would take our weeky lower high/higher high, which would confirm accelerated downside)

2.  113.35 weekly base support.

3. 109.00 key support form confirmation of a monthly downward trend.

Resistance:

1.  119.20 choppy range base from early October.

2.  119.90 old top from mid-October.

3.  121.40 old top from December 2005.

Resist.

118.05

117.00

116.40

116.19

115.35

114.91

113.86

Support