• Greek progress fails to inspire significant market reaction thus far
• Euro is however managing to outperform the commodity bloc
• Softer China trade data and a downbeat RBA statement weigh on Aussie
• US equity futures looking top heavy; could be poised for fresh drop
• USD/JPY continues to show signs of complex basing pattern

The response to the second Greece bailout has so far been less than impressive, with the Euro failing to materially extend gains against the buck on the news of Greek politicians agreeing to the austerity measures needed to unlock Eur130B aid money. However, one interesting development has been the outperformance in the Euro relative to the commodity currencies, and this could be where the single currency stands to benefit the most from the Greece news.

The Euro has been under tremendous pressure against the commodity bloc for some time now, resulting in fresh record lows against both Aussie and Kiwi, and the latest developments in conjunction with some not so positive news for the commodity currencies could tip the scales a bit back in favor of the Euro. We have been seeing an ongoing deterioration in Chinese economic data, with the most recent trade data reflective of the softening fundamentals, and this should be a knock against the correlated Australian and New Zealand Dollars.

Additionally, the RBA statement was rather downbeat after the central bank revised down its inflation and growth forecast for 2012. It is also worth noting that incoming RBA board member Heather Ridout was on the wires describing the Australian Dollar as having too much froth in it. Still, we would not get overly bearish on the Australian Dollar just yet, as this is a market that has continued to remain exceptionally well bid on any form of a dip given the highly attractive yield differentials. Our core bias is aggressively bearish on the Australian Dollar both technically and fundamentally, but at this point, there is no sense in exercising this bias just yet. We have already begun to build short Aussie positions, but will wait for a little more confirmation before increasing our exposure.

Elsewhere, USD/JPY continues with its impressive recovery and the prospects for material basing our once again looking like a solid possibility. Next key resistance comes in by 78.05-78.30 in the form of the 200-Day SMA and some key multi-day range resistance, and a break above here could very well accelerate gains towards the critical October highs at 79.55. EUR/CHF has also been very well supported in recent trade, and the SNB will find comfort in the cross’ break back above 1.2100. US equity futures are tracking lower on the day and we would also recommend keeping a close watch on these markets. Technical studies are looking quite stretched and we anticipate some bearish price action over the coming sessions.

ECONOMIC CALENDAR

TECHNICAL OUTLOOK

EUR/USD: The latest multi-session consolidation has been broken, with the pair clearing resistance at 1.3235 and opening a test of the 100-Day SMA just over 1.3300. Given the recent consolidation range of approximately 200 points (1.3025-1.3235), we will leave the door open for a move towards the 1.3450 area before the market eventually looks to stall out and carve a more meaningful lower top ahead of broader underlying bear trend resumption. A break back below 1.3025 is now required to officially alleviate immediate topside pressures.

USD/JPY:The market could once again be looking to carve an interim base after setbacks stalled shy of the record lows from October by 75.55. The latest daily close back above 77.00 should do a good job of alleviating immediate downside pressures and reintroducing longer-term basing prospects. From here, look for an acceleration of gains back towards next key resistance by 78.05-78.30 further up which represents the 200-Day SMA and some key range resistance. At this point, only back under 76.50 would negate outlook and give reason for concern.

GBP/USD: Gains have stalled out just shy of the 200-Day SMA for now and the market looks to be entering a fresh period of consolidation before considering the next major move. Key levels to watch above and below come in by 1.5930 and 1.5730 respectively, and a daily close above or below will be required for clearer directional bias. A close below 1.5730 could open the door for some broader underlying bearish resumption, while back above 1.5930 exposes the October highs by 1.6170 further up.

USD/CHF: Although our overall outlook remains intensely bullish, the market is in the process of some interday corrective activity before the next major upside extension beyond 0.9600 and towards parity. However, look for any setbacks to be very well supported into the 0.9000 area, with the level representing a key psychological barrier and also coinciding with the lower Bollinger band. For now, a break back above 0.9265 will officially be required to confirm outlook and alleviate immediate downside pressures.

--- Written by Joel Kruger, Technical Currency Strategist

To contact Joel Kruger, email jskruger@dailyfx.com. Follow me on Twitter @JoelKruger

To be added to Joel Kruger’s distribution list, send an email with subject line “Distribution List” to jskruger@dailyfx.com

• European Central Bank rate decision due later today
• Bank of England also scheduled; expected to increase QE
• Investors still waiting on finalization of Greece agreement
• China inflation data puts government in uncomfortable position
• Yen and Franc continue to show signs of deterioration from recent strength

Thursday is a day of event risk with both the Bank of England and European Central Bank set to decide on rates. However, unlike other rate decision days in past, the central bank policy decisions are likely to take a backseat to more risk sensitive themes in the form of the Eurozone crisis and ongoing Greek saga. Many are expecting that a Greece deal will get done at any moment, and this should help to bolster sentiment somewhat, but with technical studies showing risk correlated assets looking overdone, we wonder how much more the Euro and other risk sensitive currencies have in the tank before once again relenting to broader pressures and rolling back over.

While the ECB is not expected to change policy in any way, the Bank of England will probably be making a move, through an increase in asset purchases by GBP50B. We have already seen some relative underperformance in the Pound in recent sessions, perhaps in anticipation of this actualization. Elsewhere, Chinese government officials are certainly not pleased with the latest inflation results, with the data coming in hotter than expected and making the PBOC’s job all the more difficult. A combination of a slowing economy and rising inflation is a mixture that other economies have struggled to contend with throughout the global crisis, and this makes China’s job significantly more challenging.

We continue to see the China risk as one that has not yet appropriately been priced into markets, and a risk which ultimately will more heavily on currencies like the highly correlated Australian Dollar. Moving on, the Yen and Franc have been quietly depreciating from key levels in recent sessions and it will be interesting to see if both these currencies can continue to show signs of more significant deterioration ahead. Technically, price action in EUR/USD will be the most critical as far as gauging directional bias, and although we feel that additional upside should be limited from here, we see risks for gains to extend towards 1.3400 before the market attempt to carve the next medium-term lower top.

ECONOMIC CALENDAR

TECHNICAL OUTLOOK

EUR/USD: The latest multi-session consolidation has been broken, with the pair clearing resistance at 1.3235 and now opening the door for a test of the next key level in the form of the 100-Day SMA just over 1.3300. Given the recent consolidation range of approximately 200 points (1.3025-1.3235), we will leave the door open for a move towards the 1.3450 area before the market eventually looks to stall out and carve a more meaningful lower top ahead of broader underlying bear trend resumption. A break back below 1.3025 is now required to officially alleviate immediate topside pressures.

USD/JPY:The market could once again be looking to carve an interim base after setbacks stalled shy of the record lows from October by 75.55. A bullish reversal day from last Friday has shown some decent follow through and the latest daily close back above 77.00 should do a good job of alleviating immediate downside pressures and reintroducing longer-term basing prospects. From here, look for an acceleration of gains back towards next key resistance by 78.30 further up. Back under 76.50 would negate outlook and give reason for concern.

GBP/USD: The latest break back above 1.5800 now compromises a multi-week consolidation, with the pair now looking to push towards next key resistance by 1.6000. However, despite the upside move, we see any additional gains from here as limited and would look for a topside failure somewhere around 1.6000 in favor of a bearish resumption. Daily studies confirm and are starting to look stretched as well. A close back under 1.5730 will also suggest that the market has peaked out for now in favor of bearish resumption.

USD/CHF: Although our overall outlook remains intensely bullish, the market is in the process of some interday corrective activity before the next major upside extension beyond 0.9600 and towards parity. However, look for any setbacks to be very well supported into the 0.9000 area, with the level representing a key psychological barrier and also coinciding with the lower Bollinger band. For now, a break back above 0.9265 will officially be required to confirm outlook and alleviate immediate downside pressures.

--- Written by Joel Kruger, Technical Currency Strategist

To contact Joel Kruger, email jskruger@dailyfx.com. Follow me on Twitter @JoelKruger

To be added to Joel Kruger’s distribution list, send an email with subject line “Distribution List” to jskruger@dailyfx.com

• European Central Bank rate decision due later today
• Bank of England also scheduled; expected to increase QE
• Investors still waiting on finalization of Greece agreement
• China inflation data puts government in uncomfortable position
• Yen and Franc continue to show signs of deterioration from recent strength

Thursday is a day of event risk with both the Bank of England and European Central Bank set to decide on rates. However, unlike other rate decision days in past, the central bank policy decisions are likely to take a backseat to more risk sensitive themes in the form of the Eurozone crisis and ongoing Greek saga. Many are expecting that a Greece deal will get done at any moment, and this should help to bolster sentiment somewhat, but with technical studies showing risk correlated assets looking overdone, we wonder how much more the Euro and other risk sensitive currencies have in the tank before once again relenting to broader pressures and rolling back over.

While the ECB is not expected to change policy in any way, the Bank of England will probably be making a move, through an increase in asset purchases by GBP50B. We have already seen some relative underperformance in the Pound in recent sessions, perhaps in anticipation of this actualization. Elsewhere, Chinese government officials are certainly not pleased with the latest inflation results, with the data coming in hotter than expected and making the PBOC’s job all the more difficult. A combination of a slowing economy and rising inflation is a mixture that other economies have struggled to contend with throughout the global crisis, and this makes China’s job significantly more challenging.

We continue to see the China risk as one that has not yet appropriately been priced into markets, and a risk which ultimately will more heavily on currencies like the highly correlated Australian Dollar. Moving on, the Yen and Franc have been quietly depreciating from key levels in recent sessions and it will be interesting to see if both these currencies can continue to show signs of more significant deterioration ahead. Technically, price action in EUR/USD will be the most critical as far as gauging directional bias, and although we feel that additional upside should be limited from here, we see risks for gains to extend towards 1.3400 before the market attempt to carve the next medium-term lower top.

ECONOMIC CALENDAR

TECHNICAL OUTLOOK

EUR/USD: The latest multi-session consolidation has been broken, with the pair clearing resistance at 1.3235 and now opening the door for a test of the next key level in the form of the 100-Day SMA just over 1.3300. Given the recent consolidation range of approximately 200 points (1.3025-1.3235), we will leave the door open for a move towards the 1.3450 area before the market eventually looks to stall out and carve a more meaningful lower top ahead of broader underlying bear trend resumption. A break back below 1.3025 is now required to officially alleviate immediate topside pressures.

USD/JPY:The market could once again be looking to carve an interim base after setbacks stalled shy of the record lows from October by 75.55. A bullish reversal day from last Friday has shown some decent follow through and the latest daily close back above 77.00 should do a good job of alleviating immediate downside pressures and reintroducing longer-term basing prospects. From here, look for an acceleration of gains back towards next key resistance by 78.30 further up. Back under 76.50 would negate outlook and give reason for concern.

GBP/USD: The latest break back above 1.5800 now compromises a multi-week consolidation, with the pair now looking to push towards next key resistance by 1.6000. However, despite the upside move, we see any additional gains from here as limited and would look for a topside failure somewhere around 1.6000 in favor of a bearish resumption. Daily studies confirm and are starting to look stretched as well. A close back under 1.5730 will also suggest that the market has peaked out for now in favor of bearish resumption.

USD/CHF: Although our overall outlook remains intensely bullish, the market is in the process of some interday corrective activity before the next major upside extension beyond 0.9600 and towards parity. However, look for any setbacks to be very well supported into the 0.9000 area, with the level representing a key psychological barrier and also coinciding with the lower Bollinger band. For now, a break back above 0.9265 will officially be required to confirm outlook and alleviate immediate downside pressures.

--- Written by Joel Kruger, Technical Currency Strategist

To contact Joel Kruger, email jskruger@dailyfx.com. Follow me on Twitter @JoelKruger

To be added to Joel Kruger’s distribution list, send an email with subject line “Distribution List” to jskruger@dailyfx.com

• Greece deal looks like it really could happen
• WSJ reports that ECB could make concessions on Greek debt
• Yen extends recent declines while Franc also shows renewed weakness
• Bank of England kicks off two day policy meeting; expected to increase QE

A fresh wave of optimism has been injected into the Euro, with the single currency outperforming in recent trade on the back of legitimate expectations that a Greece deal is finally near. Greek party officials are slated to meet later today to facilitate the agreement of the bailout, which one party leader says should not end in humiliation for the country. Also seen propping the Euro is a report from the WSJ which says that the ECB might consider making concessions on Greek debt.

The break in EUR/USD above the recent consolidation highs at 1.3235 ends a multi-session bout of consolidation which should now open additional upside towards the 100-Day SMA in the mid 1.3300’s. Elsewhere, the Yen is also on the move, with the currency weakening across the board and diminishing the possibilities for a retest of its record highs against the US Dollar from October. The EUR/CHF cross is also looking like it could be basing out, with the market moving further away from its 1.2000 SNB floor after SNB Jordan reaffirmed the central bank’s strong commitment to defend the level.

Moving on, the Bank of England kicks off its two day policy meeting, and while rates are expected to remain on hold tomorrow, there is a general consensus that the BOE will announce the expansion of its asset purchase target by GBP50B to GBP325B total. The economic calendar for Wednesday is fairly light and we would recommend keeping a close eye on Greece developments and global equity prices which in our opinion are at risk for a significant bout of profit taking on overbought technical readings.

ECONOMIC CALENDAR

TECHNICAL OUTLOOK

EUR/USD: The latest multi-session consolidation has been broken, with the pair clearing resistance at 1.3235 and now opening the door for a test of the next key level in the form of the 100-Day SMA at 1.3335. Given the recent consolidation range of approximately 200 points (1.3025-1.3235), we will leave the door open for a move towards the 1.3450 area before the market eventually looks to stall out and carve a more meaningful lower top ahead of broader underlying bear trend resumption. A break back below 1.3025 is now required to officially alleviate immediate topside pressures.

USD/JPY:The market could once again be looking to carve an interim base after setbacks stalled shy of the record lows from October by 75.55. A bullish reversal day from last Friday has shown some decent follow through and a daily close back above 77.00 will do a good job of alleviating immediate downside pressures and reintroducing longer-term basing prospects. Inability to establish back above 77.00 on Wednesday will however keep the focus on the downside and on a retest of the record lows.

GBP/USD: The latest break back above 1.5800 now compromises a multi-week consolidation, with the pair now looking to push towards next key resistance by 1.6000. However, despite the upside move, we see any additional gains from here as limited and would look for a topside failure somewhere around 1.6000 in favor of a bearish resumption. Daily studies confirm and are starting to look stretched as well. A close back under 1.5730 will also suggest that the market has peaked out for now in favor of bearish resumption.

USD/CHF: Although our overall outlook remains intensely bullish, the market is in the process of some interday consolidation before the next major upside extension beyond 0.9600 and towards parity. However, with the latest consolidative declines now finally testing the 100-Day SMA, any additional downside should be limited in favor of a fresh upside extension. Ultimately, only a daily close back below 0.9000 would give reason for concern. Alternatively, a close back above 0.9250 would alleviate immediate downside pressures and reaffirm outlook.

--- Written by Joel Kruger, Technical Currency Strategist

To contact Joel Kruger, email jskruger@dailyfx.com. Follow me on Twitter @JoelKruger

To be added to Joel Kruger’s distribution list, send an email with subject line “Distribution List” to jskruger@dailyfx.com

• Euro remain relative underperformer and posts record lows on commodity crosses
• Yen finding offers against buck to avoid direct retest of record levels from October
• BOJ Shirakawa warns of the severity of deflation and Yen strength
• Aussie comes under a bit of pressure on softer retail sales data
• RBA set to meet early Tuesday and additional rate cut expected
• Moody’s warns of contagion to Asia as Eurozone crisis lingers on
• Key deadline for Greece on Monday which will have market moving influence

The market response to the solid US employment data on Friday was impressive, with risk correlated assets very well bid, led by gains in the commodity bloc currencies. The Euro however came under some intense pressure against the buck and was the standout underperformer on the day due to the ongoing crisis in the Eurozone and inability for officials to come up with a formal agreement on Greece. This resulted in a break to fresh record lows in some of the Euro/commodity crosses, with EUR/AUD and EUR/NZD coming under some intense pressure.

Elsewhere, the Yen has managed to find some offers ahead of its record highs against the buck, and it will be interesting to see if this trend reversal can persist. Clearly broader flows have forced the Yen to fresh record highs in recent months despite attempts by local Japanese officials to intervene on behalf of the currency. Most recently, BOJ Shirakawa has been on the wires saying that current deflation and the Yen strength are very “severe” and that steady policy needs to be implemented by investigating economic conditions.

Moving on, the Australian Dollar has come under some pressure on Monday along with most currencies, but has added reason for relative underperformance following the softer than expected retail sales data. The RBA is slated to meet on Tuesday and another rate cut of 25bps can be expected. A combination of the ongoing Eurozone crisis and some deteriorating local fundamentals are seen as the primary drivers for the additional accommodation. Moody’s has also been out on Monday warning that the sovereign debt crisis in the Eurozone has increased the threat of contagion to Asia which would expose the Australian economy.

Overall, we remain skeptical with the rally in risk correlated assets and see currencies and equities at risk for significant declines in the days ahead. We remain somewhat confounded with the performance in the US equity markets, with equities nearly back to the record highs from 2007 despite the global recession. For now, the FX market will be watching the developments out of the Eurozone, with Greek leaders needing to respond to Troika and international creditors today on the country’s austerity and structural reforms. Failure to do so will increase the probability for a default, which could come as soon as March according to the latest from EU Juncker.

ECONOMIC CALENDAR

TECHNICAL OUTLOOK

EUR/USD: Although gains in this market have been quite impressive in recent days, the price action is still classified as corrective with the market locked in a broader underlying downtrend. From here we would still leave the door open for additional upside to test the 100-Day SMA by 1.3340, but any additional gains should be well capped below 1.3500 on a daily close basis in favor of the formation of the next major lower top ahead of bearish resumption. Ultimately we see risks for a move back below the 2012 lows at 1.2620 and towards the 1.2000 area over the coming months. A daily close back under 1.3025 would suggest that a lower top is now in place and open a more immediate bearish resumption.

USD/JPY:The market could once again be looking to carve an interim base after setbacks stalled shy of the record lows from October by 75.55. A bullish reversal day from last Friday has shown some decent follow through and a daily close back above 77.00 will do a good job of alleviating immediate downside pressures and reintroducing longer-term basing prospects. Inability to establish back above 77.00 will however keep the focus on the downside and on a retest of the record lows.

GBP/USD: The latest break back above 1.5800 now compromises a multi-week consolidation, with the pair now looking to break towards next key resistance by 1.6000. However, despite the upside move, we see any additional gains from here as limited and would look for a topside failure somewhere ahead of 1.6000 in favor of a bearish resumption. Daily studies confirm and look stretched and selling rallies above 1.5900 over the coming sessions is the preferred strategy. A close back under 1.5750 will also suggest that the market has peaked out for now in favor of bearish resumption.

USD/CHF: Although our overall outlook remains intensely bullish, the market is in the process of some interday consolidation before the next major upside extension beyond 0.9600 and towards parity. However, with the latest consolidative declines now finally testing the 100-Day SMA, any additional downside should be limited in favor of a fresh upside extension. Ultimately, only a daily close back below 0.9000 would give reason for concern. Alternatively, a close back above 0.9250 would alleviate immediate downside pressures and reaffirm outlook.

--- Written by Joel Kruger, Technical Currency Strategist

To contact Joel Kruger, email jskruger@dailyfx.com. Follow me on Twitter @JoelKruger

To be added to Joel Kruger’s distribution list, send an email with subject line “Distribution List” to jskruger@dailyfx.com

• Euro remain relative underperformer and posts record lows on commodity crosses
• Yen finding offers against buck to avoid direct retest of record levels from October
• BOJ Shirakawa warns of the severity of deflation and Yen strength
• Aussie comes under a bit of pressure on softer retail sales data
• RBA set to meet early Tuesday and additional rate cut expected
• Moody’s warns of contagion to Asia as Eurozone crisis lingers on
• Key deadline for Greece on Monday which will have market moving influence

The market response to the solid US employment data on Friday was impressive, with risk correlated assets very well bid, led by gains in the commodity bloc currencies. The Euro however came under some intense pressure against the buck and was the standout underperformer on the day due to the ongoing crisis in the Eurozone and inability for officials to come up with a formal agreement on Greece. This resulted in a break to fresh record lows in some of the Euro/commodity crosses, with EUR/AUD and EUR/NZD coming under some intense pressure.

Elsewhere, the Yen has managed to find some offers ahead of its record highs against the buck, and it will be interesting to see if this trend reversal can persist. Clearly broader flows have forced the Yen to fresh record highs in recent months despite attempts by local Japanese officials to intervene on behalf of the currency. Most recently, BOJ Shirakawa has been on the wires saying that current deflation and the Yen strength are very “severe” and that steady policy needs to be implemented by investigating economic conditions.

Moving on, the Australian Dollar has come under some pressure on Monday along with most currencies, but has added reason for relative underperformance following the softer than expected retail sales data. The RBA is slated to meet on Tuesday and another rate cut of 25bps can be expected. A combination of the ongoing Eurozone crisis and some deteriorating local fundamentals are seen as the primary drivers for the additional accommodation. Moody’s has also been out on Monday warning that the sovereign debt crisis in the Eurozone has increased the threat of contagion to Asia which would expose the Australian economy.

Overall, we remain skeptical with the rally in risk correlated assets and see currencies and equities at risk for significant declines in the days ahead. We remain somewhat confounded with the performance in the US equity markets, with equities nearly back to the record highs from 2007 despite the global recession. For now, the FX market will be watching the developments out of the Eurozone, with Greek leaders needing to respond to Troika and international creditors today on the country’s austerity and structural reforms. Failure to do so will increase the probability for a default, which could come as soon as March according to the latest from EU Juncker.

ECONOMIC CALENDAR

TECHNICAL OUTLOOK

EUR/USD: Although gains in this market have been quite impressive in recent days, the price action is still classified as corrective with the market locked in a broader underlying downtrend. From here we would still leave the door open for additional upside to test the 100-Day SMA by 1.3340, but any additional gains should be well capped below 1.3500 on a daily close basis in favor of the formation of the next major lower top ahead of bearish resumption. Ultimately we see risks for a move back below the 2012 lows at 1.2620 and towards the 1.2000 area over the coming months. A daily close back under 1.3025 would suggest that a lower top is now in place and open a more immediate bearish resumption.

USD/JPY:The market could once again be looking to carve an interim base after setbacks stalled shy of the record lows from October by 75.55. A bullish reversal day from last Friday has shown some decent follow through and a daily close back above 77.00 will do a good job of alleviating immediate downside pressures and reintroducing longer-term basing prospects. Inability to establish back above 77.00 will however keep the focus on the downside and on a retest of the record lows.

GBP/USD: The latest break back above 1.5800 now compromises a multi-week consolidation, with the pair now looking to break towards next key resistance by 1.6000. However, despite the upside move, we see any additional gains from here as limited and would look for a topside failure somewhere ahead of 1.6000 in favor of a bearish resumption. Daily studies confirm and look stretched and selling rallies above 1.5900 over the coming sessions is the preferred strategy. A close back under 1.5750 will also suggest that the market has peaked out for now in favor of bearish resumption.

USD/CHF: Although our overall outlook remains intensely bullish, the market is in the process of some interday consolidation before the next major upside extension beyond 0.9600 and towards parity. However, with the latest consolidative declines now finally testing the 100-Day SMA, any additional downside should be limited in favor of a fresh upside extension. Ultimately, only a daily close back below 0.9000 would give reason for concern. Alternatively, a close back above 0.9250 would alleviate immediate downside pressures and reaffirm outlook.

--- Written by Joel Kruger, Technical Currency Strategist

To contact Joel Kruger, email jskruger@dailyfx.com. Follow me on Twitter @JoelKruger

To be added to Joel Kruger’s distribution list, send an email with subject line “Distribution List” to jskruger@dailyfx.com

• Euro needs break above 1.3235 or below 1.3025 for directional bias
• Price action in EUR/USD to dictate direction of broader markets
• Greek PSI developments could be the source for next round of volatility
• Market participants also focused on US NFPs

Euro gains have stalled out, and in the end, it has been a week of consolidation in the markets. EUR/USD remains the key market to watch for broader directional insight, and the critical short-term levels to watch above and below come in by 1.3235 and 1.3025 respectively. A break and close above 1.3235 will open the door for the next upside extension towards the 100-Day SMA by 1.3350, while a close back under 1.3025 could suggest that a fresh medium-term lower top is in place in favor of bearish resumption.

Fundamentally, there are any number of catalysts on the horizon which could spark the next round of volatility. The ongoing Greek PSI talks are most probably at the forefront of investor minds and any clear resolution here will likely inspire a fresh round of Euro bids through the 1.3235 resistance. Conversely, a breakdown in talks which leads to the default of Greece, will likely open a bout of risk liquidation which will weigh on the Euro back below 1.3025. Another event on traders’ minds is today’s US NFP report. Overall, we have been seeing a steady recovery in US economic data, and a number which deviates far from expectation on either side, could very well open a wave of volatility which results in a break of the mentioned levels in the Euro.

ECONOMIC CALENDAR

TECHNICAL OUTLOOK

EUR/USD: Although gains in this market have been quite impressive in recent days, the price action is still classified as corrective with the market locked in a broader underlying downtrend. From here we would still leave the door open for additional upside to test the 100-Day SMA by 1.3350, but any additional gains should be well capped below 1.3500 on a daily close basis in favor of the formation of the next major lower top ahead of bearish resumption. Ultimately we see risks for a move back below the 2012 lows at 1.2620 and towards the 1.2000 area over the coming months.

USD/JPY:The higher platform that we had been looking for by 76.55 has now been broken with the market eyeing a direct retest of the record lows from October at 75.55. Overall, we will still be looking for opportunities to be buyers on dips, with longer-term studies warning of a cycle low at some point over the coming months. Our strategy will be to wait for some oversold daily studies and then look to take another shot at the long side. A break back above 76.80 will be required at a minimum to relieve downside pressures.

GBP/USD: The latest break back above 1.5800 now compromises a multi-week consolidation, with the pair now looking to break towards next key resistance by 1.6000. However, despite the upside move, we see any additional gains from here as limited and would look for a topside failure somewhere ahead of 1.6000 in favor of a bearish resumption. Daily studies confirm and look stretched and selling rallies above 1.5900 over the coming sessions is the preferred strategy.

USD/CHF: Although our overall outlook remains intensely bullish, the market is in the process of some interday consolidation before the next major upside extension beyond 0.9600 and towards parity. However, with the latest consolidative declines now finally testing the 100-Day SMA, any additional downside should be limited in favor of a fresh upside extension. Ultimately, only a daily close back below 0.9000 would give reason for concern. Alternatively, a close back above 0.9250 would alleviate immediate downside pressures and reaffirm outlook.

--- Written by Joel Kruger, Technical Currency Strategist

To contact Joel Kruger, email jskruger@dailyfx.com. Follow me on Twitter @JoelKruger

To be added to Joel Kruger’s distribution list, send an email with subject line “Distribution List” to jskruger@dailyfx.com

• Euro needs break above 1.3235 or below 1.3025 for directional bias
• Price action in EUR/USD to dictate direction of broader markets
• Greek PSI developments could be the source for next round of volatility
• Market participants also focused on US NFPs

Euro gains have stalled out, and in the end, it has been a week of consolidation in the markets. EUR/USD remains the key market to watch for broader directional insight, and the critical short-term levels to watch above and below come in by 1.3235 and 1.3025 respectively. A break and close above 1.3235 will open the door for the next upside extension towards the 100-Day SMA by 1.3350, while a close back under 1.3025 could suggest that a fresh medium-term lower top is in place in favor of bearish resumption.

Fundamentally, there are any number of catalysts on the horizon which could spark the next round of volatility. The ongoing Greek PSI talks are most probably at the forefront of investor minds and any clear resolution here will likely inspire a fresh round of Euro bids through the 1.3235 resistance. Conversely, a breakdown in talks which leads to the default of Greece, will likely open a bout of risk liquidation which will weigh on the Euro back below 1.3025. Another event on traders’ minds is today’s US NFP report. Overall, we have been seeing a steady recovery in US economic data, and a number which deviates far from expectation on either side, could very well open a wave of volatility which results in a break of the mentioned levels in the Euro.

ECONOMIC CALENDAR

TECHNICAL OUTLOOK

EUR/USD: Although gains in this market have been quite impressive in recent days, the price action is still classified as corrective with the market locked in a broader underlying downtrend. From here we would still leave the door open for additional upside to test the 100-Day SMA by 1.3350, but any additional gains should be well capped below 1.3500 on a daily close basis in favor of the formation of the next major lower top ahead of bearish resumption. Ultimately we see risks for a move back below the 2012 lows at 1.2620 and towards the 1.2000 area over the coming months.

USD/JPY:The higher platform that we had been looking for by 76.55 has now been broken with the market eyeing a direct retest of the record lows from October at 75.55. Overall, we will still be looking for opportunities to be buyers on dips, with longer-term studies warning of a cycle low at some point over the coming months. Our strategy will be to wait for some oversold daily studies and then look to take another shot at the long side. A break back above 76.80 will be required at a minimum to relieve downside pressures.

GBP/USD: The latest break back above 1.5800 now compromises a multi-week consolidation, with the pair now looking to break towards next key resistance by 1.6000. However, despite the upside move, we see any additional gains from here as limited and would look for a topside failure somewhere ahead of 1.6000 in favor of a bearish resumption. Daily studies confirm and look stretched and selling rallies above 1.5900 over the coming sessions is the preferred strategy.

USD/CHF: Although our overall outlook remains intensely bullish, the market is in the process of some interday consolidation before the next major upside extension beyond 0.9600 and towards parity. However, with the latest consolidative declines now finally testing the 100-Day SMA, any additional downside should be limited in favor of a fresh upside extension. Ultimately, only a daily close back below 0.9000 would give reason for concern. Alternatively, a close back above 0.9250 would alleviate immediate downside pressures and reaffirm outlook.

--- Written by Joel Kruger, Technical Currency Strategist

To contact Joel Kruger, email jskruger@dailyfx.com. Follow me on Twitter @JoelKruger

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• Euro needs break above 1.3235 or below 1.3025 for directional bias
• Price action in EUR/USD to dictate direction of broader markets
• Greek PSI developments could be the source for next round of volatility
• Market participants also focused on US NFPs

Euro gains have stalled out, and in the end, it has been a week of consolidation in the markets. EUR/USD remains the key market to watch for broader directional insight, and the critical short-term levels to watch above and below come in by 1.3235 and 1.3025 respectively. A break and close above 1.3235 will open the door for the next upside extension towards the 100-Day SMA by 1.3350, while a close back under 1.3025 could suggest that a fresh medium-term lower top is in place in favor of bearish resumption.

Fundamentally, there are any number of catalysts on the horizon which could spark the next round of volatility. The ongoing Greek PSI talks are most probably at the forefront of investor minds and any clear resolution here will likely inspire a fresh round of Euro bids through the 1.3235 resistance. Conversely, a breakdown in talks which leads to the default of Greece, will likely open a bout of risk liquidation which will weigh on the Euro back below 1.3025. Another event on traders’ minds is today’s US NFP report. Overall, we have been seeing a steady recovery in US economic data, and a number which deviates far from expectation on either side, could very well open a wave of volatility which results in a break of the mentioned levels in the Euro.

ECONOMIC CALENDAR

TECHNICAL OUTLOOK

EUR/USD: Although gains in this market have been quite impressive in recent days, the price action is still classified as corrective with the market locked in a broader underlying downtrend. From here we would still leave the door open for additional upside to test the 100-Day SMA by 1.3350, but any additional gains should be well capped below 1.3500 on a daily close basis in favor of the formation of the next major lower top ahead of bearish resumption. Ultimately we see risks for a move back below the 2012 lows at 1.2620 and towards the 1.2000 area over the coming months.

USD/JPY:The higher platform that we had been looking for by 76.55 has now been broken with the market eyeing a direct retest of the record lows from October at 75.55. Overall, we will still be looking for opportunities to be buyers on dips, with longer-term studies warning of a cycle low at some point over the coming months. Our strategy will be to wait for some oversold daily studies and then look to take another shot at the long side. A break back above 76.80 will be required at a minimum to relieve downside pressures.

GBP/USD: The latest break back above 1.5800 now compromises a multi-week consolidation, with the pair now looking to break towards next key resistance by 1.6000. However, despite the upside move, we see any additional gains from here as limited and would look for a topside failure somewhere ahead of 1.6000 in favor of a bearish resumption. Daily studies confirm and look stretched and selling rallies above 1.5900 over the coming sessions is the preferred strategy.

USD/CHF: Although our overall outlook remains intensely bullish, the market is in the process of some interday consolidation before the next major upside extension beyond 0.9600 and towards parity. However, with the latest consolidative declines now finally testing the 100-Day SMA, any additional downside should be limited in favor of a fresh upside extension. Ultimately, only a daily close back below 0.9000 would give reason for concern. Alternatively, a close back above 0.9250 would alleviate immediate downside pressures and reaffirm outlook.

--- Written by Joel Kruger, Technical Currency Strategist

To contact Joel Kruger, email jskruger@dailyfx.com. Follow me on Twitter @JoelKruger

To be added to Joel Kruger’s distribution list, send an email with subject line “Distribution List” to jskruger@dailyfx.com

• Euro still eyeing test of 100-day SMA
• Greek PSI talks ongoing; waiting for official agreement
• Fed Chair Bernanke testimony and US NFPs in focus
• Aussie trade data comes in better thane expected
• EUR/CHF and USD/JPY by key levels

Currencies still remain well supported on dips heading into the latter half of the week and the Euro still could head higher towards our objective by the 100-Day SMA at 1.3355. The key level to watch over the coming session comes in by 1.3235, and a break above should accelerate gains. For now, we are still waiting for additional details and the finalization of the Greek PSI deal, and any actualization of the agreement over the coming sessions could act as the catalyst for the next push in the major towards 1.3355. Other factors which come into play over the coming days are the Fed Chair Bernanke testimony and the all important US Non-farm payroll report due out on Friday.

Elsewhere, the commodity currencies continue to outperform, with Aussie rallying up through 1.0750 following the better than expected trade data earlier today. Market participants managed to shrug off the less encouraging Aussie building approvals, and remain intent on buying the higher yielding currency which has correlated so well to exceptional global equity performance. Other markets worth keeping an eye on are EUR/CHF which trades just over the critical 1.2000 SNB floor and USD/JPY which threatens a retest of the record lows from October at 75.55. The Japanese FinMin was on the wires overnight warning that firm measures will be taken and that short term speculative Yen moves will not be ignored. While we see risks for a break of the record lows at 75.55, we would also heed the warnings of Japanese officials and favor looking to buy USD/JPY with additional declines seen limited from here.

ECONOMIC CALENDAR

TECHNICAL OUTLOOK

EUR/USD: Although gains in this market have been quite impressive in recent days, the price action is still classified as corrective with the market locked in a broader underlying downtrend. From here we would still leave the door open for additional upside to test the 100-Day SMA by 1.3355, but any additional gains should be well capped below 1.3500 on a daily close basis in favor of the formation of the next major lower top ahead of bearish resumption. Ultimately we see risks for a move back below the 2012 lows at 1.2620 and towards the 1.2000 area over the coming months.

USD/JPY:The higher platform that we had been looking for by 76.55 has now been broken with the market eyeing a direct retest of the record lows from October at 75.55. Overall, we will still be looking for opportunities to be buyers on dips, with longer-term studies warning of a cycle low at some point over the coming months. Our strategy will be to wait for some oversold daily studies and then look to take another shot at the long side. A break back above 76.80 will be required at a minimum to relieve downside pressures.

GBP/USD: The latest break back above 1.5800 now compromises a multi-week consolidation, with the pair now looking to break towards next key resistance by 1.6000. However, despite the upside move, we see any additional gains from here as limited and would look for a topside failure somewhere ahead of 1.6000 in favor of a bearish resumption. Daily studies confirm and look stretched and selling rallies above 1.5900 over the coming sessions is the preferred strategy.

USD/CHF: Although our overall outlook remains intensely bullish, the market is in the process of some interday consolidation before the next major upside extension beyond 0.9600 and towards parity. However, with the latest consolidative declines now finally testing the 100-Day SMA, any additional downside should be limited in favor of a fresh upside extension. Ultimately, only a daily close back below 0.9000 would give reason for concern. Alternatively, a close back above 0.9250 would alleviate immediate downside pressures and reaffirm outlook.

--- Written by Joel Kruger, Technical Currency Strategist

To contact Joel Kruger, email jskruger@dailyfx.com. Follow me on Twitter @JoelKruger

To be added to Joel Kruger’s distribution list, send an email with subject line “Distribution List” to jskruger@dailyfx.com