BOE and ECB policy decisions in focus today

Briefing
The dollar was steady in Asia Thursday, after yet another lackluster session which saw the dollar trade narrow ranges. Dollar-yen opened around Y90.99, before making marginal gains to Y91.05. The pair then edged off towards the session lows at Y90.80, before range trading in light flows. Traders noted the upside appears capped by exporter offers from Y91.10, with bids building from around Y90.60/70 with larger interest seen toward Y90.50 and stops below there.

Euro-dollar also slipped from an early high of $1.3903 to hit its session low of $1.3867, before bouncing. Late in the session, euro-dollar was little changed at $1.3888.

The release of disappointing New Zealand employment data, jumping to 7.3% from 6.8%, provided for early risk-off flows, with sales of Kiwi-yen weighing on other yen pairs, a fall of 0.7% in Australian retail sales adding to this scenario. Sovereign demand aided an Aussie correction, helped by strong buildings approvals data.

The Bank of England and European Central Bank policy decisions provide today's main highlight. Both are expected to remain unchanged though the BOE decision on future QE is the main focus.

Euro
Euro-dollar opened Asia around $1.3893, off Wednesday's pullback lows of $1.3889, the rate having corrected off intraday highs of $1.4026 (European morning) on concerns over Spanish and Portuguese debt. Release Thursday of better than expected ADP data has led to some analysts adjusting their forecast for Friday's NFP data which has also benefited the dollar. Euro-dollar initially edged up to $1.3903 before reversing as rate came under pressure from cross yen sales, prompted by release of the disappointing NZ employment data. The rate initially met demand at $1.3880 before a secondary push squeezed the pair on to a low of $1.3866.

A decent sized $1.3850 barrier was seen within touching distance but was said to have attracted decent protective demand ahead. This level is expected to remain in focus into European trade. Euro-dollar then recovered through the balance of the Asian session, meeting resistance around $1.3895 ($1.3894 76.4% $1.3903/1.3866). Support is seen from the overnight low through to the mentioned barrier at $1.3850, with tight stops noted on a break. Resistance remains at $1.3895/05, stops above $1.3910.

Asian traders note that euro demand interest is seen thinning, though admit that there are some bids still around. They suggest that the much publicized $1.3850 barrier is vulnerable. Stops are noted below this level, though expect some profit take demand to quickly emerge should any downmove look pressured.

RES 4: $1.4218 Low 22 Dec
RES 3: $1.4195 High 25 Jan, 21-day moving average
RES 2: $1.4132 38.2% retracement, while $1.3853 remains base
RES 1: $1.4026/32 High 3 Feb & First Fibonacci level, Low 21 Jan

CURRENT LEVEL: $1.3895

SUP 1: $1.3853 Low 1 Feb
SUP 2: $1.3825 Low 22 June
SUP 3: $1.3801 50% retracement of March/Dec rally
SUP 4: $1.3736/50 50% post-Oct 2008, 61.8% April/Dec rally, Low 16 June

Yen
Dollar-yen finally took out the Y91.00 level in yesterday's trade buoyed by higher US yields, the weakness in a Japanese automakers share price and general dollar recoveryto a high of Y91.28. Overnight, there was not much action in the dollar-yen as the market drifted lower to trade down to Y90.79 as the crosses were sold off. The overnight range was Y90.79-91.06.

There is talk of plenty of selling interest placed near yesterday's high with potential for some more stop losses behind. Expect there to be some tech resistance at Y91.45 area (50% Fibonacci retracement). On the downside initial support at Y90.75 but bigger support at Y90.10 then Y89.85 (the latter being the top of the Ichimoku cloud line).

RES 4: Y92.65/70 High 11 Jan, 200-day moving average
RES 3: Y92.00/05 61.8% retracement of Jan decline, High 14 Jan
RES 2: Y91.87 High 21 Jan
RES 1: Y91.28/45 High 3 Feb, 50% retracement of Jan decline & Kijun line

CURRENT LEVEL: Y90.91

SUP 1: Y89.80 Top of the Ichimoku cloud
SUP 2: Y89.14 Low 27 Jan
SUP 3: Y88.80/95 Base of the Ichimoku cloud, Low 18 Dec
SUP 4: Y88.24 61.8% retracement of the 26 Nov rally

Cable
Opened Asia around $1.5890, off Wednesday's pullback lows at $1.5886, the rate having seen intraday highs during the european morning of $1.6070 before disappointing CIPS data deflated the enthusiasm. Rate initially pushed up to mark session highs at $1.5921, as euro-sterling came under early sell pressure, with traders seen adjusting positions ahead of today's BOE rate decision (1200GMT). Market expecting no change in rates but decision on QE will be in focus.

A softer tone in Asian equities prompted market to pare back risk, the release of disappointing NZ employment data, along with poor Australian retail sales also added weight, with cable breaking back below the figure, marking session lows at $1.5882 in late Asia, with early Europe taking it on to $1.5868. Rate has since recovered, currently trading around $1.5897 as it continues to gain buoyancy from euro-sterling weight. Demand seen placed toward recent lows at $1.5850, a break to expose another band of strong support at $1.5935/30. Resistance now seen at $1.5900/10, more at $1.5920/25.

RES 4: $1.6245/65 200, 100-day moving average
RES 3: $1.6220 55-day moving average
RES 2: $1.6145 21-day moving average
RES 1: $1.6080 Low 22 Jan

CURRENT LEVEL: $1.5894

SUP 1: $1.5833/50 Low 30 Dec, Low 1 Feb, Bollinger band base
SUP 2: $1.5770 Low 28 Sep
SUP 3: $1.5749 38.2% retracement of $1.3659 to $1.7041
SUP 4: $1.5708/21 Low 13 Oct, High Dec 2008 & 50% of $1.44 advance

Focus Today on Greek Deficit Cutting Plan

Briefing
The dollar was little changed in Asia Wednesday. Just ahead of the European open, dollar-yen was at Y90.45, in the middle of it's Y90.31/57 Asian range and little changed from where it ended in New York, around Y90.39. Euro-dollar stood at $1.3963, in the middle of the $1.3946/76 range. Flows were muted and tied to narrow ranges. Sterling enjoyed standout activity, boosted by the release of upbeat Nationwide consumer confidence data which took cable above $1.6000, with continued buying able to brush aside reported real money offers toward $1.6010, trading around $1.6030 in early Europe.

Focus today will be on the European Commission's response to the Greek deficit cutting plan, though most expect any criticism to be tempered. Eurozone and UK services PMIs provide additional focus, while the Norges Bank rate announcement at 1300GMT should see a pause in the recent tightening cycle. US ADP hiring and ISM non-manufacturing data in focus for this afternoon.

Euro
Euro-dollar opened Asia around $1.3970 and initially pushed up to mark session highs at $1.3978 before meeting decent supply placed on approach to $1.3980. US name selling provided the main counter with stronger sales prompted as the market reacted to a report that Fitch had downgraded two Chinese banks. The news weighed on Asian equity markets, prompting strong selling in euro-yen and Aussie-yen, which helped to squeeze euro-dollar to lows of $1.3947.

Recovery in Asian stocks allowed euro-dollar to recover, trading around $1.3970 into early Europe. Rate remains contained, traders noting strong demand Tuesday by a semi official name which kept rate buoyed above $1.3920/10, while decent supply kept rate capped below $1.3980. Offers remain in place between $1.3980/90, with plenty of talk mentioning stops above $1.4000, some suggesting main interest seen from $1.3905 through to $1.4025. European Commission is due to deliver a response to the Greek deficit cut plans, though most expect any criticism to be tempered. Greek/bund spreads and equity market influence on risk to continue to provide main drive.

RES 4: $1.4218 Low 22 Dec, 21-day moving average
RES 3: $1.4195 High 25 Jan
RES 2: $1.4132 First main Fibonacci level, while $1.3853 remains base
RES 1: $1.4032 Low 21 Jan

CURRENT LEVEL: $1.3963

SUP 1: $1.3853 Low 1 Feb
SUP 2: $1.3825 Low 22 June
SUP 3: $1.3801 50% retracement of March/Dec rally
SUP 4: $1.3736/50 50% post-Oct 2008, 61.8% April/Dec rally, Low 16 June

Yen
Quiet session overnight in the dollar-yen with the pair staying in a very tight range of Y90.30-Y90.56. Talk of some real money accounts and Japanese lifers on the bid but overall very lacklustre. The cross yen was bit of a different story in particular the Aussie-yen and euro-yen as the risk on/off theme continued. News that Fitch downgraded 2 Chinese banks appeared to have a negative influence on the Asian equity markets and this led to a sell off in the cross-yen.

However as the equity markets recovered so did the crosses and the euro-yen Y126.35 and Aussie-yen Y80.33 both returned levels just off the highs of the session. For today support can be seen in Aussie-yen at Y79.80, Y79.50 and Y79.26 resistance is noted Y80.40, Y81.00. In euro-yen support at Y126.00, Y125.80, resistance Y126.48, Y126.70. Key levels in dollar-yen support, Y90.20, Y90.00 resistance at Y90.60 and Y90.95.

RES 4: Y92.65/70 High 11 Jan, 200-day moving average
RES 3: Y91.87/05 Highs 21 Jan, 14 Jan
RES 2: Y91.50 Kijun line of the Ichimoku cloud
RES 1: Y90.93/00 Recent highs 29 Jan/2 Feb, 21-day moving average

CURRENT LEVEL: Y90.51

SUP 1: Y89.14/45 Low 27 Jan, Top of the Ichimoku cloud
SUP 2: Y88.95 Low 18 Dec

SUP 3: Y88.55 Base of the Ichimoku cloud
SUP 4: Y88.24 61.8% retracement of the 26 Nov rally

Cable
Cable opened Asia around $1.5970 and pushed up to challenge reported offers placed toward $1.6000 (NY high $1.5998). Rate made a show above the figure to $1.6009 before meeting real money supply which capped this initial move. Rate reversed the early rally as risk took a knock as Asian equities fell on reports that Fitch had downgraded two Chinese banks. Rate found support at $1.5966 ($1.5963 is 50% of $1.5917/1.6009) before bouncing back. This move again met resistance ahead of $1.6000 before a second push took rate through the reported offers at $1.6010 and on to challenge tech resistance at $1.6013 (38.2% $1.6277/1.5850).

Eventual break here took rate on to session highs of $1.6033 ahead of the European open, with Europe taking it on to $1.6038 before momentum faded. Rate eased to $1.6025/20 before finding renewed demand interest that has lifted the rate on to fresh highs at $1.6045. Offers seen placed toward $1.6050 with further interest seen dotted toward $1.6065 ($1.6064 50%). Above here and rate can push on toward $1.6080 ahead of $1.6114 (61.8%). Support seen at $1.6025/20, $1.6000.

RES 4: $1.6235/70 200, 55 & 100-day moving average
RES 3: $1.6155 21-day moving average
RES 2: $1.6080 Low 22 Jan
RES 1: $1.6015 5-day moving average

CURRENT LEVEL: $1.6004

SUP 1: $1.5833/50 Low 30 Dec, Low 1 Feb
SUP 2: $1.5770 Low 28 Sep, 2% moving average envelope
SUP 3: $1.5749 38.2% retracement of $1.3659 to $1.7041
SUP 4: $1.5708/21 Low 13 Oct, High Dec 2008 & 50% of $1.44 advance

Australia Keeps Interest On Hold

Briefing
The greenback was narrowly mixed in the Asia, ending close to the middle of trading ranges against the majors as the RBA surprised markets as it left rates on hold (+25bp had been widely forecast). The Aussie fell sharply from around $0.8925 to a low of $0.8823 almost immediately after the RBA decision, extending the low to $0.8782. The move triggered a broad unwinding in risk positions, and euro-dollar came unhinged along with that, falling to a $1.3886 low after spending most of the morning between $1.3908/36.

However, the pair rallied to $1.3925 ahead of the European open. Aussie-yen fell below Y80.00 for a low of Y79.65, and that initially triggered a retreat in dollar-yen. Dollar-yen was at Y90.80 in early Europe, having been as low as Y90.58, with some speculative demand in the recovery seen prompted by Japan Kamei comments suggesting Japan Post diversification. Euro-yen had lifted to an early high of Y126.61 before it too fell back on the RBA decision, dropping to Y125.86. Euro recovery in early Europe sees rate back at Y126.40.

Euro
Euro-dollar opened Asia around $1.3930 and got an early lift from cross yen demand taking it up to session highs of $1.3937. Decent sell interest placed ahead of $1.3940 capped the move and saw it ease back to $1.3910. The RBA's surprise decision to keep rates unchanged (most had forecast a hike of 25bp) prompted a paring back in risk positions with euro-dollar dropping down to $1.3886. Rate recovered on the back of reported European demand, lifting back above the figure ahead of the European open and extending move to retest earlier highs at $1.3937, before again meeting that same resistance from offers placed ahead of $1.3940.

A tightening in Greek bonds to German bunds seen aiding euro's buoyant tone, with traders also reporting decent buys seen from a US investment house in Asia. Tech traders have suggested that rate needs to move above $1.3940 to boost recovery hopes going forward, following a 5-day series of lower highs. Rate currently trades around $1.3926. A break above $1.3940/50 to open a move toward $1.3988 (Jan 28 high) with sell interest noted from here and extending toward $1.4000.

RES 4: $1.4240 21-day moving average
RES 3: $1.4195/18 High 25 Jan, Low 22 Dec
RES 2: $1.4032 Low 21 Jan
RES 1: $1.3945 5-day moving average

CURRENT LEVEL: $1.3926

SUP 1: $1.3853 Low1 Feb
SUP 2: $1.3825 Low 22 June
SUP 3: $1.3790/01 Current Bollinger band base, 50% of March/Dec rally
SUP 4: $1.3736/50 50% post-Oct 2008, 61.8% April/Dec rally, Low 16 June

Yen
Dollar-yen failed to break out of its recent range highs overnight. The pair traded up to Y90.92 (recent high Y90.93) on the back of a Financial Times report quoting Japan's banking minister Kamei as saying Japan Post should buy more corporate bonds and US Treasuries rather than JGBs. However the strength was short lived as the RBA kept rates on hold despite an expectation of a hike.

This saw some Aussie-yen sales hit the market and drag the dollar-yen down to Y90.60 area coupled with some euro-yen sales (down to Y125.86). Traders say that there is still good resistance at Y91.00 for the time being although stops are said to be building behind. Support is seen at Y90.55 previous breakout point and treble bottom on the intra-day chart since the break higher.

RES 4: Y92.65/75 High 11 Jan, 200-day moving average
RES 3: Y91.87/05 Highs 21 Jan, 14 Jan
RES 2: Y91.50 Kijun line of the Ichimoku cloud
RES 1: Y90.93/10 Recent highs 29 Jan/2 Feb, 21-day moving average

CURRENT LEVEL: Y90.76

SUP 1: Y89.14/35 Low 27 Jan, Top of the Ichimoku cloud
SUP 2: Y88.95 Low 18 Dec
SUP 3: Y88.55 Base of the Ichimoku cloud
SUP 4: Y88.24 61.8% retracement of the 26 Nov rally

Cable
Opened Asia around $1.5958 with rate restricted to an early range of $1.5940/65 before pushing up to post session highs at $1.5975 before dropping back to $1.5920 as markets reacted to the surprise no rate change by the RBA. The move overtook euro-dollar's negative reaction to the decision, allowing euro-sterling to recover off early dip lows of stg0.87095, rallying back to stg0.87405.

Cable recovered, meeting resistance ahead of $1.5950 in Asia before getting a lift on to $1.5955/60 into early Europe before again dropping back, finding support this time around $1.5925. Rate currently trades around $1.5945. Offers reported in place between $1.5975/80 with stops above. Support remains at $1.5920 ahead of $1.5900.

RES 4: $1.6235/75 200, 55 & 100-day moving average
RES 3: $1.6150 21-day moving average
RES 2: $1.6040/80 5-day moving average, Low 22 Jan
RES 1: $1.5986 Intra-day gap top from 29 Jan

CURRENT LEVEL: $1.5939

SUP 1: $1.5833/50 Low 30 Dec, Low 1 Feb, Base of daily Bollinger band
SUP 2: $1.5770/85 Low 28 Sep, 2% moving average envelope
SUP 3: $1.5749 38.2% retracement of $1.3659 to $1.7041
SUP 4: $1.5708/21 Low 13 Oct, High Dec 2008 & 50% of $1.44 advance

Market Remains Cautious on Risk
BRIEFING
Euro-yen sank to fresh 9-month low of Y124.50 in early Asian trade, the move down led by sales of Aussie-yen as the market supposedly reacted to weekend comments from FSA Head Lord Turner signalling a crackdown on carry trades. The move dragged dollar-yen through rumored stops around Y89.85 to a low of Y89.76. Although dollar-yen rebounded smartly soon after, euro-yen remained depressed near Y124.80/90 through much of the morning, before rallying to Y125.43. Dollar-yen's recovery saw it hit a high of Y90.39, as specs sought shelter in the dollar and as the euro was shunned against a backdrop of rising risk-aversion and persistent worries about euro-zone debt. Late on, euro-dollar was at $1.3875, near the top of the session's $1.3852/88 range (defence of an option barrier at $1.3850 cushioned the lows).

The market remains wary of risk assets with direction to again be dictated by equity market action. Data highlights today include Eurozone and UK manufacturing PMIs ahead of US PCE and ISM data later on. In view this week are rate decisions from the RBA (+25bp expected), Norges Bank (pause in recent hiking cycle), BOE (halt in asset purchase prgramme in Feburuary), ECB (no change). US jobs data is the main focus, released Friday.

EURO
Euro-dollar opened Asia around $1.3862 (NY low) and was under pressure in early trade on strong euro-yen selling. Move suggested to have been prompted by market reaction to weekend comments from UK FSA Head Lord Turn 'signalling' a crackdown on carry trades, which triggered early sales of Aussie-yen. A major US name was linked to early heavy sales but move ran into decent demand placed ahead of a reported barrier at $1.3850 which cushioned the move at $1.3853. Reversal in euro-yen (Aussie-yen bounced away from its 200 day m/a at Y79.12, Y79.00 low) took euro-dollar back to $1.3888.

Rate eased back to retest the early lows, getting rejected again with recovery this time passing through the earlier Asian highs into Europe, extending to $1.3895. Rate currently trades around $1.3892. Offers seen placed between $1.3900/10, more toward $1.3920 ahead of $1.3940/50. Support remains ahead of the mentioned barrier at $1.3850, with stops placed on a break of $1.3845. Stronger demand expected to emerge between $1.3835/25 ahead of $1.3800 (50% $1.2455/1.5144).

Government bond supply this week in the eurozone is due from France, Germany, Spain and the Netherlands and is expected to ease to E22.0bln vs E27.8bln last week.

RES 4: $1.4265 21-day moving average
RES 3: $1.4195/18 High 25 Jan, Low 22 Dec
RES 2: $1.4032 Low 21 Jan
RES 1: $1.3975 5-day moving average

CURRENT LEVEL: $1.3884

SUP 1: $1.3820 Current base of the daily Bollinger band
SUP 2: $1.3825 Low 22 June
SUP 3: $1.3801 50% retracement of March/Dec rally
SUP 4: $1.3736/50 50% post-Oct 2008, 61.8% April/Dec rally, Low 16 June

YEN
Took some light buy stops out in Friday's trade but ran into good offers layered between Y90.80-Y91.00 posting a high of Y90.93. The market has tested lower briefly overnight, Y89.76 the low, as selling pressure in Asian trade (notably Aussie-Yen) came in after a UK Telegraph report that the head of Britain's Financial Supervisory Authority was looking to crack down on carry trades by limiting leverage for such activity.

The dip was short lived however as models and Japanese retail names sold yen. The pair now trades back to Y90.35 as the dollar buying continues ahead of good support in the Y89.00-Y89.30 zone (50% Fibonacci retracement and Ichimoku Cloud Support). Initial resistance on the topside is at Y90.40 (highs in the Asian session) and then stronger resistance at Y90.93 (Fridays high).

RES 4: Y92.65/80 High 11 Jan, 200-day moving average
RES 3: Y91.87/05 Highs 21 Jan, 14 Jan
RES 2: Y91.15/50 21-day moving average, Kijun line
RES 1: Y90.55 Recent highs 22/28 Jan, Tenkan line of the Ichimoku cloud

CURRENT LEVEL: Y90.23

SUP 1: Y89.14/30 Low 27 Jan, Top of the Ichimoku cloud
SUP 2: Y88.95 Low 18 Dec
SUP 3: Y88.55 Base of the Ichimoku cloud
SUP 4: Y88.24 61.8% retracement of the 26 Nov rally

CABLE
Opened the Asian session around $1.5950, off from its late NY posted low at $1.5983, with rate coming under early cross yen led pressure that took it on to $1.5936. Recovery in cross yen led cable up to highs of $1.5993 before momentum faltered and rate eased back to retest lows as markets tracked Asian equity markets lower. Fresh demand emerged at the base allowing rate to slowly recover through the balance of the Asian session, pushing back to $1.5975/80 into early Europe.

Recovery presented stale longs an exit with rate quickly dropping back to $1.5950. Support seen at $1.5950, a break to allow for another challenge on $1.5936. Below here and rate can squeeze on to $1.5915 with bid interest suggested to begin from here, strengthening toward $1.5900 ($1.5896 Jan7 and 2010 low). Resistance $1.5980 (76.4% $1.5936/93), more from that early high at $1.5993 through to $1.6000.

RES 4: $1.6270/80 100, 55-day moving average
RES 3: $1.6230 200-day moving average
RES 2: $1.6160 21-day moving average
RES 1: $1.6080 5-day moving average, Low 22 Jan

CURRENT LEVEL: $1.5957

SUP 1: $1.5898 Low 7 Jan
SUP 2: $1.5833/50 Low 30 Dec, Current base of daily Bollinger band
SUP 3: $1.5770 Low 28 Sep
SUP 4: $1.5708 Low 13 Oct

EURO WEAKNESS CONTINUES

BRIEFING
Euro weakness was the initial focus in Asia, as euro-dollar fell through the $1.4000 level to a $1.3935 low. Euro-dollar last traded below the psychological $1.4000 level on July 8 9$1.3838). Stops below $1.3985 and $1.3950 were taken out mid-morning, the pair hitting $1.3930 lows, bouncing back sharply to $1.3970/80 before stabilizing. It was trading back slightly above the $1.4000 level late in the session at $1.4005.

The dollar initially lost steam against the yen, ending the New York session around the Y90.00 level, beginning Tokyo around Y89.86 and winding up the morning around Y90.26. Euro-yen was generally well bid through the session, risk boosted by positive stocks with move to Y126.73 extending dollar-yen gains to Y90.40. The Kiwi barely budged after the Reserve Bank announced it would keep rates at a record low 2.5% and made no change to its post-meeting economic statement, though did manage to post an eventual high at $0.7107. Cable buoyed as euro-sterling broke under support at stg0.8650, rate holding around $1.6200. Further UK oil company demand expected.

EURO
Opened Asia around $1.4020, off NY lows at $1.3993, and edged up to $1.4040 in early trade on euro-yen led demand. Model and macro funds provided the main counter to the early rise, easing the rate back to retest the NY lows. News of further N.Korea artillery action off the coast of S.Korea, along with reported comments from PBOC official warning of the dangers of dollar carry trades, provided the catalyst for further selling with triggered stops through $1.3985 providing the weight to trigger option knock out levels at $1.3990, $1.3980, $1.3970, $1.3950 and $1.3930.

Rate touched $1.3930 before snapping back to $1.3965 bid in a breath. Rate recovered back above $1.4000 to $1.4020/25 before settling between $1.4005/20 ahead of Europe. Rate currently trades around $1.4020 in early European dealing. Asian talk of Asian sovereign demand aiding the recovery may have placed blame on the wrong person, some linking interest to a monetary authority, adding that same name may have sell interest now above the market. Offers $1.4020/25, $1.4040/50. Support $1.3985/80, $1.3950 and $1.3930.

RES 4: $1.4447 Low 14 Jan
RES 3: $1.4310/30 21, 200-day moving average
RES 2: $1.4195/18 High 25 Jan, Low 22 Dec
RES 1: $1.4090 5-day moving average

CURRENT LEVEL: $1.4016

SUP 1: $1.3960 Current base of the daily Bollinger band
SUP 2: $1.3902 Minor support line 3 Nov
SUP 3: $1.3801/25 50% retracement of March/Dec rally, Low 22 June
SUP 4: $1.3736/50 50% post-Oct 2008, 61.8% April/Dec rally, Low 16 June

YEN
Dollar-yen and cross yen opened Asia on a bid tone, with markets upbeat following Obama's State of the Union speech (no bank bashing seen boosting risk). Dollar-yen pushed to a high of Y90.40, from opening lows around Y89.88, with offers placed toward Y90.50 seen providing a cap.

Euro-yen pushed to an early high around Y126.45 from the low Y126's, dropping back to Y125.90, as euro-dollar fell back on triggered option stops, before recovering back to post highs at Y126.73 as risk trades remained in favour on positive equity markets. Yen retains a soft feel into early Europe, dollar-yen currently trading around Y90.35, euro-yen at its overnight highs of Y126.73. Dollar-yen offers to Y90.50, stops on break of Y90.60. Support Y90.00/89.90. Euro-yen offers Y126.80, Y127.40/50. Support Y126.00/125.90.

RES 4: Y92.65/85 High 11 Jan, 200-day moving average
RES 3: Y91.87/05 Highs 21 Jan, 14 Jan
RES 2: Y91.40/50 21-day moving average, Kijun line
RES 1: Y90.55 Recent highs, Tenkan line of the Ichimoku cloud

CURRENT LEVEL: Y90.28

SUP 1: Y89.14/20 Low 27 Jan, Top of the Ichimoku cloud
SUP 2: Y88.95 Low 18 Dec
SUP 3: Y88.55 Base of the Ichimoku cloud
SUP 4: Y88.24 61.8% retracement of the 26 Nov rally

CABLE
Opened Asia around $1.6175 and initially edged up to $1.6180 before dropping back to retest NY pullback lows at $1.6137 as rate tracked euro-dollar's severe drop as option levels were triggered. Cable posted a low at $1.6135 before snapping back, the recovery aided as the euro move allowed euro-sterling to break support at stg0.8650 (taking out the option barrier there). The cross posted a low at stg0.8632. Cable rallied back to post session highs at $1.6230, the recovery in euro-sterling back to stg0.8650 then weighing back to ease rate back to $1.6170 ahead of the European open.

Rate slowly recovered , breaking the overnight highs into early Europe to extend move to $1.6240, just short of Wednesday's highs at $1.6245. Rate retains a firm tone around $1.6235, the cross currently around stg0.8638. Cable offers seen placed between $1.6240/50, a break to open a move toward $1.6270/80 with stops above. Talk that Tullow Oil raising of stg1bln Wednesday to be converted to dollars to fund African expansion which could counter ongoing UK oil company dividend demand interest.

RES 4: $1.6459/79 High 19 Dec 61.8% retracement of the 16 Nov decline
RES 3: $1.6415 Current top of the daily Bollinger band
RES 2: $1.6295 100, 55-day moving average
RES 1: $1.6215 200-day moving average

CURRENT LEVEL: $1.6184

SUP 1: $1.6077 Low 22 Jan
SUP 2: $1.6061 Support line from 30 Dec
SUP 3: $1.6030 76.4% retracement of the $1.5898/1.6459 rally
SUP 4: $1.5898/30 Low 7 Jan, Current base of daily Bollinger band

MORNING FX
BRIEFING
German name sales of cross yen ahead of the Sydney open triggered exposed stops, left vulnerable in the thin markets, with euro-yen dropping 50 points to an early low of Y126.69 and dragging dollar-yen down to Y89.71. The move met fund demand at the lows which snapped euro-yen back to Y127.95, dollar-yen to Y90.41 before the rates settled back to Y127.80 and Y90.25. Euro-dollar got a mild bid tone at the start of the main session, thanks to the euro-yen recovery. The pair managed a $1.4173 high and then spent the rest of the morning shuffling between there and $1.4133. Rate currently trades around $1.4155.

After the active start market overall in Asia was described as subdued. Exporter demand for Aussie provided buoyancy, offsetting any negative react from the release of weaker than expected Australian PPI data, with Asian sovereign buys also cited as the rate lifted from lows of $0.8995 to $0.9075 before Japanese sales of Aussie-yen countered. Focus today is on developments over Bernanke's re-appointment, with US existing home sales the stand out data release.

EURO
Euro-dollar opened Asia around $1.4150, slightly firmer than the NY close as traders adjusted the rate on the weekend reports that Bernanke would secure enough Senate votes to be reappointed. Rate came under pressure in early pre Sydney trade as a German name took advantage of the thin conditions to target downside stops in euro-yen, forcing this rate down 50 points to Y126.69, the move taking euro-dollar to early lows of $1.4112.

Recovery was seen more aggressive as funds emerged into normal hours trading, euro-yen spiking back up to Y127.95, with euro-dollar tracking the move as it rallied to $1.4173. Rate then settled into a $1.4150/70 range for the balance of the session, currently trading around $1.4163. Offers seen placed between $1.4175/85,with talk of stops positioned on a break of $1.4190. Further offers noted toward $1.4220 with more stops above. Support seen at $1.4155/50, more between $1.4135/25 ahead of the mentioned Asian low at $1.4112.

RES 5: $1.4447 Low 14 Jan
RES 4: $1.4355 21-day moving average
RES 3: $1.4315 200-Day moving average
RES 2: $1.4218 Low 22 Dec
RES 1: $1.4170 5-day moving average

CURRENT LEVEL: $1.4162

SUP 1: $1.4090 Current base of the daily Bollinger band
SUP 2: $1.4009/29 Low 29 Jul, 50% retrace of April/Dec rally, Low 21 Jan
SUP 3: $1.3937 Minor support line 3 Nov
SUP 4: $1.3801/25 50% retracement of March/Dec rally, Low 22 June
SUP 5: $1.3736/50 50% post-Oct 2008, 61.8% April/Dec rally, Low 16 June

YEN
German name selling of yen crosses greeted the thin pre Sydney market Monday, euro-yen dropping 50 points to Y126.69, the move dragging dollar-yen to session lows of Y89.71. Fund demand emerged into the dips with the correction off the lows snapping euro-yen through reported CTA stops at Y127.80 to take rate on to Y127.95. Dollar-yen rallied back to Y90.41 before recovery faded, with Japanese sales of Aussie-yen noted as a factor in the counter. Euro-yen currently trades around Y127.70, dollar-yen at Y90.30.

Dollar-yen offers placed toward Y90.50, with stops reported above. A break here to open a move to Y90.80 ahead of Y92.00. Support remains toward Y89.70 (Asia low Y89.71), with stronger interest seen from Y89.50 through to Y89.30. For euro-yen, offers placed toward Y128.00, more from Y128.20 through to Y128.40 with stops placed on a break of Y128.50. Support Y126.70/50.

RES 4: Y92.05 High 14 Jan
RES 3: Y91.70/87 21-day moving average, High 21 Jan
RES 2: Y91.15/35 Kijun & Tenkan lines of the Ichimoku cloud
RES 1: Y90.36 Breakout level & 100-day moving average

CURRENT LEVEL: Y90.12

SUP 1: Y89.30 50% retracement of the 26 Nov rally
SUP 2: Y88.95 Low 18 Dec
SUP 3: Y88.55 Top of the Ichimoku cloud
SUP 4: Y88.24/30 61.8% retracement, Base of the Ichimoku cloud

CABLE
02:54 01/25 CABLE: Opened Asia around $1.6100 and initially marked session lows at $1.6090 as rate tracked the early cross yen sell pressure. Rate recovered off lows, in tandem with euro-yen and euro-dollar, pushing up to $1.6137 where it met US name supply. Rate eased back to $1.6100, settling for most of the session between $1.6095/1.6125 before a late rally spiked rate up to $1.6144 ahead of the European open, the move seen as a reaction to euro-sterling as this rate dropped back from overnight highs at stg0.8796 to stg0.87665.

Cable currently trades around $1.6125, the cross around stg0.8770. Cable offers seen between $1.6145/55, a break of $1.6160 to open a move toward $1.6190/00. Support seen at $1.6090 (Asia low), stronger between $1.6075/65.

RES 4: $1.6479 61.8% retracement of the decline from 16 Nov
RES 3: $1.6435/59 Top of the daily Bollinger band, High 19 Dec
RES 2: $1.6310/20 100, 55-day moving average
RES 1: $1.6220 5-day moving average

CURRENT LEVEL: $1.6118

SUP 1: $1.6077 Low 22 Dec
SUP 2: $1.6028/30 Minor support line, 76.4% of $1.5898/1.6459 rally
SUP 3: $1.5898 Low 7 Jan
SUP 4: $1.5880 Current base of daily Bollinger band