Monday’s an unusually quiet day for scheduled economic releases, which provides an opportunity to focus on three of the major currency pairs. The general theme, of course, has been dollar strength in recent months. The rise has been fueled by concerns of a slowdown in global growth ex-US and a relatively resilient run of data for America lately.
Geopolitical risk is on the march as well, which tends to inspire support for the world's reserve currency. The net result: a growing appetite for holding greenbacks. Although the rally took a breather last week, Bloomberg reminded us over the weekend that the US Dollar Index had previously moved higher for 12 straight weeks - the best bull run for the buck since 1971, which marks the dawn of the modern age of free-floating currencies.
Still running hot: The USD is breaking records with its 12-week bull run. Photo: Thinkstock
EURUSD Last week’s economic news for Europe - Germany in particular - was troubling to the point that recession looks likely for the euro area. Perhaps it’ll be a mild downturn, which is to say that it may be tough to distinguish the former “recovery” from a new phase of contraction.
Despite the dark releases for Europe's main economy, the euro managed a mini rally last week, albeit one that was fading by Friday. Some of the fuel for the rise in EURUSD was a bounce back from an oversold condition in the early days of October. But the roughly 1.251 low for October 3 to October 6 isn’t all that far away at the moment and it wouldn’t take much in the way of a new round of bearish news for Europe to revive the downward bias.
That said, a hefty dose of downsized expectations is already built into the euro at the moment. A period of relative calm may be in store as the market digests the recent volatility in the absence of major releases. The next hurdle: tomorrow’s August report on industrial production for Europe. The numbers won't be pretty. But that’s old news at this point via Germany's updates last week and so the data that Eurostat will report tomorrow for the Eurozone isn’t likely to bring any surprises. 
USDJPY The yen showed some strength late last week after dipping to a six-year low of nearly 110 USDJPY on October 1, according xe.com. But a number of analysts think the bullish reversal for Japan’s currency is just a temporary affair on the road to 120. If that major support line gives way, some technicians say, 140 and beyond will follow in short order.
Meantime, it’s not terribly surprising that USDJPY made a U-turn last week. After the run to 110, the dollar rally looked a touch frothy. Indeed, the rolling 20-day percentage return was running above the 90th percentile late last month and so the yen was either headed for a meltdown or a respite.
An influential economist in Japan on matters of the yen said last week that a 106-111 USDJPY range for the near term is a reasonable assumption. “A weak yen is no longer a plus for the Japanese economy, particularly if it weakens to 115-120 to the dollar; the negatives would outweigh the benefits,” Eisuke Sakakibara - known as “Mr Yen” - told Reuters on Friday.
Such comments carry resonate at the moment, thanks partly to last week’s upbeat news on capital spending in Japan. The nearly 5% jump in core machinery orders inspired some analysts to anticipate a slightly brighter climate for Japan in the near term.
“Companies had delayed capital investment as the economy languished in the aftermath of the 2008 Lehman shock, but now labor shortages are necessitating productivity improvements and fueling their appetite for investment,” said the chief economist at SMBC Nikko Securities.
But with no shortage of numbers that still suggests a challenged environment at present, a honeymoon from the bearish pressure on the yen won’t last long without another dose of encouraging hard data soon. 
GBPUSD In line with other major currencies, the pound’s been on the defensive against a strong US dollar. The bearish momentum still has a head of steam, although last week ended with a small rally in sterling. It wouldn’t be surprising to see some follow through early this week. After a steady run lower since the summer, GBPUSD has fallen 6% from July’s start.
The pound has enjoyed two relief rallies lately, partly because Scotland voted to stay in the United Kingdom. But more political uncertainty awaits in the wake of Friday’s news that the UK Independence Party, which is eager for Britain to leave the European Union, won its first seat in Parliament last week. “UKIP supporters are very pessimistic on the economy,” explained a professor of politics at the University of Strathclyde. “The improvement in the economy hasn't trickled down to the older working-class, and that’s UKIP's constituency.”
The more immediate concern is Europe’s deteriorating economic trend, according to Britain’s Chancellor of the Exchequer. “We have a set of external shocks from the conflicts in the Middle East, the Ukrainian [crisis] to the horrific disease of Ebola in West Africa, which are increasing uncertainty,” George Osborne said on Friday. “But most seriously, the biggest risk to the global economy at the moment and certainly the biggest external risk to the UK is the risk of the Eurozone falling back into recession and into crisis.”
Meantime, US economic numbers continue to look robust, offering a bullish comparison against higher anxiety about Britain. Last week’s US initial jobless claims report, for instance, declined a bit more, inching closer to a 14-year low.
Britain, by contrast, will likely face a new phase of headwinds because of Europe. As a result, even lower levels for GBPUSD seem likely short of a surprisingly bullish round of hard data in the upcoming economic reports for the UK.