Greek Bailout Plan in Focus

Briefing
The dollar pared gains against the yen through the Asian session and was sitting close to the session lows of Y89.53 ahead of the European open. Dollar-yen traded to a high at Y90.02, as Asia took on board the increased hopes for a settlement to the Greek situation. This also saw euro-dollar trade to an early high at $1.3807. However, as the situation became less clear, with the Goldman's/Greece swap story again to the fore, euro-dollar fell to session lows at $1.3734. Japanese exporter sales were prominent as yen pairs eased, euro-yen off 100 points to Y123.00.

Chinese trade data came in weaker-than-expected and copper imports were down by a noticeable amount, which all added to negative weight against the Aussie, which was also pressured by weak domestic data. Aussie-dollar eased to lows of $0.8736 from $0.8797. IP out of Italy 0900GMT and UK 0930GMT ahead of BOE Inflation Report at 1030GMT provide this morning's highlights. Inclement weather in DC and NY to affect calendar releases in the US. Bernanke text will be released but US trade data may lag stated release time of 1330GMT.

Euro
Euro-dollar opened Europe around $1.3797 before cross yen buys in early Asia lifted it on to mark session highs at $1.3808. Rate eased off, settling for a while around $1.3790/75 before Asian sovereign sales emerged to knock rate down to session lows of $1.3734. Rate was on a recovery course ahead of the European open, with added demand from early buyers lifting rate back toward the mentioned Asian sovereign sell level at $1.3775. Offers seen placed between $1.3775/80 ($1.3780 61.8% $1.3808/1.3734), a break to open a move toward $1.3800 (61.8% $1.3840/1.3734) ahead of $1.3810/15.

Traders have noted that there has been good demand for $1.3850 strikes for Friday expiry. Support seen at $1.3735/30 with interim interest suggested at $1.3750. Focus remains on any developments to eurozone plans for possible aid to Greece, and other periphery eurozone countries. Inclement weather in DC and NY has hit data releases for the rest of the week, though trade data today to be released via website. Bernanke testimony will be released (1500GMT), though no appearance.

RES 4: $1.4191/95 Channel top 3 Dec, High 25 Jan
RES 3: $1.4043/46 21-day moving average, Lows 21 Jan, 17 Aug
RES 2: $1.4026 High 3 Feb
RES 1: $1.3853 Low 1 Feb

CURRENT LEVEL: $1.3757

SUP 1: $1.3585 Low 5 Feb
SUP 2: $1.3519/35 Proj channel support 3 Dec, Bollinger base, 2% MAE
SUP 3: $1.3485 61.8% retracement of March/Dec rally
SUP 4: $1.3404/20 61.8% of the post-Oct 2008 76.4% April/Dec rally

Yen
Dollar-yen continues to be the most stable of the currency pairs for the time being. Opening in London at Y89.76 after trading up to Y90.02 in the early part of the Asian session. There were talk of exporter offers layered up to this area. Talk is that the dollar-yen is benefitting from cross-yen demand as the market continues to focus on any noise coming out of Euroland regarding the Greek debt situation.

Technically the dollar-yen is in no-mans land, trading deep within the daily Ichimoku cloud. A daily close below the base of the cloud at Y89.00 area would signal more downside pressure for dollar-yen. On the topside Y90.00-15 area is said to hold more offers. Y90.54 is the 38.2% Fibonacci retracement of the Y93.75-Y88.56 downmove, past that we have Y91 as the top of the daily Ichimoku cloud.

RES 4: Y91.87 High 21 Jan
RES 3: Y91.28 High 3 Feb, Kijun line
RES 2: Y91.00 Top of the Ichimoku cloud
RES 1: Y90.00/35 Tenkan line, 21, 100 & 55-day DMAs,

CURRENT LEVEL: Y89.67

SUP 1: Y89.00 Base of the Ichimoku cloud
SUP 2: Y88.55 Low 4 Feb
SUP 3: Y88.24 61.8% retracement of the 26 Nov rally
SUP 4: Y87.36 Low 9 Dec

Cable
Opened Asia around $1.5715, off NY highs of $1.5749. Rate initially edged up to mark session highs at $1.5728, the move seen in tandem with euro-dollar, with both pairs then slipping lower, cable dropping back to $1.5660 by late Asian dealing, as risk positions were pared on release of weaker than expected Chinese trade data, along with market looking for confirmation/clarity over speculated eurozone plans for Greece (and periphery eurozone countries). Cable was recovering off lows ahead of the European open, with early buys lifting the rate on to $1.5690/95 before momentum again faltered. Rate currently sits back around $1.5775.

UK industrial production/manufacturing data is due for release at 0930GMT, partly overshadowed by the BOE Inflation Report at 1030GMT. Traders have suggested going short ahead of the Report, suggesting the Bank could lower its 2-yr inflation targets because of lower GDP, with Report in general expected to be dovish. Support seen at $1.5660/50, a break to open a deeper move toward $1.5635/30 ahead of $1.5610/00. Resistance $1.5705/15 ahead of $1.5725/30 and $1.5750.

RES 4: $1.6055 21-day moving average
RES 3: $1.5833/50 Low 30 Dec, Low 1 Feb
RES 2: $1.5811 Top of minor downchannel from mid-February
RES 1: $1.5749 Hourly high

CURRENT LEVEL: $1.5680

SUP 1: $1.5655 5-day moving average
SUP 2: $1.5530/35 Current base of the daily Bollinger band, Low 8 Feb
SUP 3: $1.5409/12 61.8% retracement of $1.44 advance, Projection level
SUP 4: $1.5350/68 50% retracement of $1.3659 to $1.7041, High 5 Jan 2009

New Scenario on GBPJPY

Critical Level on GBPJPY

Focus on US Labor Data Today

Briefing
The dollar chalked up modest gains in the Asian morning Friday as risk sentiment continued to worsen. Dollar-yen got a lift from lows of Y88.90 early doors to trade at Y89.75 initially. The pair extended those gains even as yen crosses retreated, touching Y89.79. The euro was battered again this morning, courtesy of the weakening risk environment, touching a low at $1.3761, before rallying to $1.3710. There was good action in Swiss crosses overnight, with some market chatter - unconfirmed - of SNB activity. Euro-Swiss dipped early to Chf1.4551, attracting some spec names.

The cross edged up to Chf1.4620 initially, and then jumped to Chf1.4905, sparking talk of intervention (some traders say the SNB was seen paying at the high, with the rate through the legs trading a lot lower, before eventually it eased back to settle around Chf1.4700/20). Dollar-Swiss was also higher, touching Chf1.0800 highs before profit-taking from specs emerged. US employment report at 1330GMT the day's highlight. Expect position adjustments ahead of release.

Euro
Euro-dollar opened in Asia around the NY closing lows at $1.3727. Early, pre-fix demand for euro-yen provided an initial recovery lift which took rate up to session highs of $1.3747, but demand faltered in post fix trade leaving the rate to drop back through overnight lows, the momentum able to trigger stops/barrier through $1.3700 before taking it to fresh lows of $1.3669. Rate snapped back to $1.3725 as euro-Swiss saw a savage reversal off its pressured lows of Chf1.4551, with official intervention suggested to have taken rate to a high of Chf1.4905.

Euro-Swiss eased back to settle between Chf1.4700/20, while euro-dollar corrected back to $1.3700 before lifting back toward those recovery highs into early Europe. Rate currently trades around $1.3725. Offers seen placed to $1.3730 ($1.3729 76.4% $1.3747/1.3669), a break above to allow for a move toward $1.3745/50. Support remains at $1.3700 ahead of $1.3669.

RES 4: $1.4195 High 25 Jan
RES 3: $1.4160 21-day moving average
RES 2: $1.4026/46 High 3 Feb, Lows 21 Jan, 17 Aug
RES 1: $1.3853 Low 1 Feb, 5-day moving average

CURRENT LEVEL: $1.3895

SUP 1: $1.3655 2% Moving average envelope
SUP 2: $1.3635 Current base of the daily Bollinger band
SUP 3: $1.3485 61.8% retracement of March/Dec rally
SUP 4: $1.3404/20 61.8% of the post-Oct 2008 76.4% April/Dec rally

Yen
Dollar-yen was hit hard late in Thursday's session as the cross-yen sell- off impacted. Overnight, a range of different accounts were seen buying cross yen, and this helped the dollar-yen recover over 100 points off the low of Y88.55. We are now firmly in the Ichimoku cloud that was initially providing decent support, a daily close below Y88.90 would be seen as very negative for the pair but the market awaits US non-farm payrolls for the next indication on direction.

The cross-yen collapsed late in Thursday trade, the risk-off scenario continuing as equities and commodities markets were sold aggressively. Overnight there was a light recovery, some bargain hunting occurred as a range of different accounts bought the crosses.

RES 4: Y91.87 High 21 Jan
RES 3: Y91.28 High 3 Feb
RES 2: Y90.70 21-day moving average
RES 1: Y90.00/35 Tenkan line, 100 & 55-day DMAs, Top of the Ichimoku cloud

CURRENT LEVEL: Y89.62

SUP 1: Y88.95 Base of the Ichimoku cloud
SUP 2: Y88.55 Low 4 Feb
SUP 3: Y88.24 61.8% retracement of the 26 Nov rally
SUP 4: Y87.36 Low 9 Dec

Cable
Opened Asia around $1.5760, off its NY lows of $1.5716, and extended its recovery in early trade to $1.5776 as cross yen saw good demand interest into the Tokyo fix. This demand faded post fix and allowed rate to drop back to $1.5714 ahead of the European open, with added selling into Europe providing the weight to extend move to $1.5704.

Rate currently trades around $1.5735/40. Resistance seen toward $1.5750 ($1.5748 61.8% $1.5776/04) ahead of $1.5760 (76.4%) and $1.5775/80. Support remains in place between $1.5705/1.5690 with stops below, which if triggered to open a deeper move toward $1.5660/50.

RES 4: $1.6125 21-day moving average
RES 3: $1.6080 Low 22 Jan
RES 2: $1.5880 5-day moving average
RES 1: $1.5833/50 Low 30 Dec, Low 1 Feb

CURRENT LEVEL: $1.5721

SUP 1: $1.5708/21 Low 13 Oct, High Dec 2008 & 50% of $1.44 advance
SUP 2: $1.5680/88 2% moving average envelope, 38.2% of 2009 range
SUP 3: $1.5545 100% projection of $1.7041/1.5708 decline
SUP 4: $1.5409/12 61.8% retracement of $1.44 advance, Projection level

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