EUR/JPY The Main Market Mover

U.S. Dollar Trading (USD) the market volatility ramped up again on heavy stockmarket losses across the globe after the FOMC minutes fallout continued acrossthe Asian and then European sessions. The US data did little to help withmisses on Weekly jobless claims (362k vs. 355k f/c), February Philly FED (-12.5vs. 1.0% f/c) and Flash Manufacturing PMI (55.2 vs. 55.5f/c). Looking ahead, FOMC members Powell and Tarullo Speak both could beimportant with QE3 tapering off in 2013 being the main story in the marketsovernight.

The Euro (EUR) the EUR/USD broke through a very important level at1.3260 going into the European session yesterday and fell to fresh multi weeklows near 1.3160. The market has recovered so far with some stabilizingcomments from Eurozone politicians including the German FinMin Scheuble, Eurois at ‘quite a good’ level. Analysts suggest German Exporters can handle theEUR/USD up to 1.5000 where France and the PIGS are seen competitive at EUR/USD1.1700. The Sterling (GBP) broke lower going into in the start of the European session with GBP/USDhitting new trend lows at 1.5125 before rebounding sharply to 1.5260 as EUR/GBPselling. The outlook is very weak for the GBP/USD and selling rallies remains thepreferred way to gain from the strong downtrend. Looking ahead, February German IFO Business Climate forecast at 105vs. 104.2 previously.

The Japanese Yen (JPY) USD/JPY came under pressure from the liquidation ofYen crosses especially the EUR/JPY which broke key support at Y123 and draggedmost pairs lower. The market is terming the recent rally “the reflation trade”and when the US FOMC Minutes hinted on taking away the cheap money via its QE3program the market’s reaction was quite violent. Australian Dollar (AUD)the AUD/USD wasunder pressure from AUD/JPY liquidations but the 1.0225 level held firm and wehave seen a solid bounce in the Asian session following some hawkish commentaryfrom the RBA Governor Stevens.UPDATE RBA Governor Stevens ‘China Slowdown Over’.

Oil & Gold (XAU) Goldhit fresh year lows under $1560 before bouncing to$1580. OIL/USD fell sharply after breaking through key support at $95B on Wednesday andwe hit $93B before stabilizing overnight.

Pairs to watch

XAU/USD bargain huntersto support? Bears Target 2012 lows near $1525

USD/JPY buyers emergeunder Y93 or EUR/JPY Selloff to continue?

TECHNICAL COMMENTARY