EUR/USD

The pair settled the week lower but crucially above the psychologically important 1.3000 level as market participants booked profits following a sharp rally after investors reacted positively to a deal which averted the so-called fiscal cliff. In addition to that, the USD index surged as market participants reacted to the FOMC minutes which suggested that policy easing measures may come to an end as early as this year. The minutes of the Fed's Dec. 11-12 policy meeting showed that officials were divided about when to halt the programs, with a few wanting to continue them until year-end, several others wanting to end the programs well before then and some wanting to halt them right away. In terms of technical levels, supports are seen at the 21DMA lower Bollinger level at 1.2945, followed by the 100DMA line at 1.2914. On the other hand, resistance levels are seen at the 21DMA line at 1.3139 and then at the 10DMA line at 1.3168

GBP/USD

The pair trended in tandem with EUR/USD throughout the week and settled lower as sentiment turned sour after the release of the minutes from most recent FOMC policy meeting showed a growing number of policy makers would like the QE program to end as early as this year. The pair also failed to benefit from EUR-diversification flows and instead, less than impressive macro data underpinned the bearish tone. In terms of technical levels, supports are seen at 1.6002, 1.5988 and then at 1.5962 which is Nov-28th low. On the other hand, resistance levels are seen at the 21DMA line at 1.6159 and then at the 21DMA upper Bollinger level at 1.6298.

USD/JPY

Broad-based JPY weakness was observed throughout the week as market participants came back to their desks for the first time this year in Tokyo and continued to price in further policy easing by the BoJ. Of note, SocGen sees USD/JPY rising to 97.00 by the end of 2013. In terms of technical levels, supports are seen at 87.47 which is the 61.8% retracement of 2010/11 decline and then the psychologically important 87.00 level. On the other hand, resistance levels are seen at 89.00/15 and then at 89.98 which is Jun-24th 2010 high.