China RRR Cut Supports AUD In Quiet Trading

KEY DATA RELEASES TODAY (BST) :

No Key Data Today

OVERNIGHT:

Benefiting from the USD weakness, the EUR has had its best week in a month despite growing concerns on Greece’s debt crisis. The European Central Bank is concerned if Greece runs out of money and starts paying civil servants with IOU’s, creating a virtual second currency in euro zone. Expectations of a swift EURUSD sell off following G20 communiqué over the weekend appeared to be relatively short­ lived as the pair transpires to be in consolidation mode in this morning’s after a lacklustre Asian session following last week’s break and positional adjustment to the topside. From here 1.0850­80 area acting as key resistance level. To the downside short term support comes in at 1.0760 followed by key level at 1.0660.Little in way of economic data releases today.

USDJPY has had five straight sessions now of lower highs/lower lows… Technically the pair remains magnetized by 119.95 (the level where the pair closed on Friday as well). 118.50 is the support level to watch now on the downside, where a break below could see a move towards 118. Players prefer buying dips, respecting the broad 118­/122 range, and given the US CPI showing signs of stability, risk­ positive developments over the weekend, If carry remains a popular strategy, cross JPY demand should also keep the pair supported.

UK employment data on Friday was strong enough to generate further buying interest, but the GBPUSD was capped at the 1.5050 resistance level. This week, we get the BOE minutes as the main domestic risk to watch… anticipate the tone to reflect continued concern over the strong currency.

PRICE ACTION OVERVIEW:

EUR: Above 1.0860 refocuses on fourth 1.10 test, 10730 key intraday support ahead of medium term 1.0620
GBP: Daily close above 1.50 energises bulls, while this area caps expect consolidation, below 1.4840 revives bearish bias
JPY: While 118.30 contains downside target 121.00 en route to retest of year to date highs, only below 118.30 concerns bullish view
CAD: 123.50 former support now becomes key resistance second close below here forewarns further downside
AUD: While .7860/80 contains upside anticipate third test of key .7550 failure here opens the bearish target of .72, above .7880 alleviates downside pressure