HIGHLIGHTS:

EURUSD: Hesitating With Downside Risk - After an intra day recovery pushed the pair to as high as 1.2821 level on Tuesday, EUR bounced off its channel top giving back most of those gains to close at 1.2628...

EURJPY: Building Up To Recapture The 126.09 Level - As corrective pullbacks have faded, pressure has started building on its Feb 26’09 high at 126.09 which is a trigger for further upside gains towards the 127.66 level, its Jan 08’09 high...

EURUSD: After an intra day recovery pushed the pair to as high as 1.2821 level on Tuesday, EUR bounced off its channel top giving back most of those gains to close at 1.2628.The trigger for the pair’s upmove was its inability to break and close below its key support at the 1.2514 level, its Feb 18’09 low and the 1.2456 level, its Mar 04’09 low. We expect an eventual invalidation of this zone to yield declines towards the 1.2330 level, its swing low from Oct’08.Decisively invalidating the latter level is required to resume its medium term downtrend towards the 1.1860 level, its Mar’06 low and then its Dec’05 low at 1.1640.Though its daily stochastics is neutral, that of the weekly is bearish and pointing lower. On the other hand, continued loss of price momentum at or ahead of the 1.2514/1.2456 area could risk higher prices targeting the 1.2706/66 level, its Feb 02’09 low /Jan 23’09 low with a break through there setting the stage for further upmove towards the 1.2821 level, its Mar 10’09 high ahead of the 1.2992 level, its Feb 23’09 high. Beyond there should leave the pair aiming at its Feb 04’09/Nov 25’08 highs at 1.3071/81 and then the 1.3298/1.3313 zone, its Jan 06’09 low/Oct 30’08 high. On the whole, we maintain our downside bias on the pair while holding within its falling channel for an ultimate move towards the 1.2330 level.

EURJPY: As corrective pullbacks have faded, pressure has started building on its Feb 26’09 high at 126.09 which is a trigger for further upside gains towards the 127.66 level, its Jan 08’09 high. Beyond there will turn attention to the next two upside targets residing at the 129.72 level, its Dec 29’09 high and its range top at 131.06.We see this scenario materializing while its Jan 19’09 high at 122.17 or even the 120.03 level, its Feb 09’09 high continue to hold as supports. Downside targets are located at its Jan 19’09 high at 122.17 ahead of the 120.03 level, its Feb 09’09 high with a trade below there targeting the 117.61 level, its Dec 12’09.On the whole, recovery off the 112.09 level looks to head higher than head back down at this stage though the cross remains trapped in its broader range between the 131.06 and 112.09 levels.