Euro, Pound Fade From Cliff Highs

What a way to start 2013, Aussie rocketed, Euro did a complete U turn Pound followed and Dollar held.

Markets were reacting to the fiscal cliff and, perhaps, potential unwinding of some end-of-month flows, which happened late on Monday and last week.

Felt a bit like the markets were keen to close the gap today, so it will be interesting to see if we find support at current levels or if we push lower from here.

News was pretty light today though as participants get back into the market, expect real volume to start to pick up next week.

EUR/USD
Euro tested upper resistance today before sharply rejecting and punching lower, action is rather choppy at the moment therefore key to be careful (note not really a pin bar today due to slightly different market hours).

We highlighted the range for the Euro but a break lower could open the door for the 1.3120 / 1.31 then potentially all the way back down to 1.2880.

Longer term view on the Euro is Bullish but as with most breaks out of weekly highs and lows I would expect to see some retracement.

Strategy wise, could look for a break of weekly low to offer a short opportunity with the current signal, or further rejections on the 4hr charts (we did highlight one earlier today on Twitter if you were up then).

Otherwise I would be looking for a rejection of support from around the 1.3130 then the 1.30 mark for long entries.

Second option could be a cross in the EUR/USD COT Strength indicator highlighting long opportunities.
EUR/USD Daily" width="500" height="431">
GBP/USD
Similar to the Euro, Pound tested the upper resistance but failed to hold above it and promptly pushed lower.

The 1.6300 mark has previously given the Pound some trouble, there a break through this could really open up the door for further gains, however we could easily test and fail this level again.

Shorts do offer up some nice risk reward, off of the upper resistance. The observant of you will notice all I did was move my previous strategy along a bit (note not really a pin bar today due to slightly different market hours)

Long term, like the Euro I am Bullish this pair, a break and hold above the 1.63 mark would offer long entry options on previous resistance turned support, or potentially a retracement to the 1.62 / 16150 mark and rejection off of a support level would also offer up a nice risk reward.
GBP/USD Daily" width="500" height="431">
AUD/USD
After opening significantly higher the Aussie held its ground unlike other pairs.

Mainly buoyed by Commodities.

If we do see wider Risk Off trading and Dollar Strength the Aussie could well retrace back to test the 1.340/1.325 mark then potentially onto the 1.03 mark and 200-day moving average.

Short signals on the four-hr./one-hr. chart might offer up some good risk reward, otherwise I will be looking for stronger rejection from my blue box.
AUD/USD: Daily" width="500" height="431">
USD/JPY
Yen remains week and I wouldn't be surprised to see us hit the 88.00 mark in this pair now.

COT report points to weakness up ahead and therefore I still prefer looking for short opportunities at these levels, however, do need to see some clear strong signals before jumping on the trade (check out my New Years Day Analysis for further details)

With the over extended feel for the USD/JPY, future retracements back to the 84.25 mark wouldn't be shocking.
USD/JPY Daily" width="500" height="431">
EUR/NZD
Interesting little setup on the four-hr. chart.

A row of rejections on S2 Pivot.

Might offer a nice break out play if price breaks the pivot low with good risk reward.
EUR/NZD" width="500" height="312">
USD/SEK
How about something a little different?

Head-and-shoulders set-up on the USD/SEK looks quite interesting.

Potential opportunity if the pair holds below the 6.50 mark.
We have also broken the weekly low which could offer up further short opportunities.

I would look at stops placed above pivot high (pretty wide), therefore you would really need to be going for this one, however it does offer the potential to test 2012 lows by 6.00 so the risk reward is there.
USD/SEK: Daily" width="500" height="431">
USD/SEK: Weekly" width="500" height="449">