HIGHLIGHTS:

EURUSD: Downside Weakness Continues To Unfold - As EUR’s weakness triggered off its Mar 19’09 high at 1.3738 continues to unfold, a third day of weakness following its failure at the 13391 level saw it closing lower Thursday at 1.3173.

USDJPY: Building Up For A Higher Recovery - Following USDJPY reversal of its intra day losses and its subsequent rise higher to close flat forming long-legged dojion Thursday, threats now exist for the pair to head to the upside with the 99.68 level, its Mar 05’09 initially targeted.

EURUSD: As EUR’s weakness triggered off its Mar 19’09 high at 1.3738 continues to unfold, a third day of weakness following its failure at the 13391 level saw it closing lower Thursday at 1.3173. The key support level below there lies at the 1.3113 level, its Mar 30’09 low which if broken will drive the pair further lower towards the 1.3097/93 area, its Feb 09’09 high/.50 Ret(1.2456-1.3738 rally) and then the 1.2991 level, its Feb 23’09 high. EUR remains biased to the downside while trading and holding within its falling channel. Daily studies are supportive of this view as they are pointing lower. Nearby resistance lies at the 1.3330 level, its Jan 27’09 high with a turn above there putting the next upside target at its falling channel top at 1.3452 which is within the vicinity of its daily 200 emaat 1.3488.While we envisage that initial attempt at these levels should fail, a break through there will open up upside risk towards the 1.3580 level, its April 06’09 high and then its Mar 19’09 high at 1.3738. On the whole, although short term upmove activated at the 1.2456 level is still alive, corrective price activities has put that on hold and turned focus to the downside.

USDJPY: Following USDJPY reversal of its intra day losses and its subsequent rise higher to close flat forming long-legged dojion Thursday, threats now exist for the pair to head to the upside with the 99.68 level, its Mar 05’09 initially targeted. Convincingly invalidating that level will leave the USDJPY aiming at the 101.43 level, its April 06’09 high with a turn above there resuming its short term upside initiated at the 87.13 level towards the 102.42 level, its Oct 20’08 high. Further out, the next resistance is located at the 103.07 level, its Oct 14’08 high. This view remains consistent with its short term recovery off the 87.13 zone and its rising channel. On the other hand, reversing its current upside build up could see the pair turning back lower towards the 98.97 level, its Mar 17’09 high ahead of its daily 200 & 50 emasat 97.63/41 with a violation of that level putting its channel bottom/base at 96.99 under pressure and later the 95.95 level, its Mar 30’09 low. We expect the mentioned major emasor its channel base to provide support if seen. Daily stochastics is still pointing lower supporting this view. On the whole, the short term recovery off the 87.13 zone still remains to the upside as long as USDJPY continues to hold within its rising channel.