EUR/USD
The pair finished the session sharply lower and retraced over half of the post EU summit gains after it was reported by Xinhua news-agency that China cannot take up the role as a saviour to the EU, nor provide a cure for the European malaise due to the unprecedented debt crisis. In addition to that, broad based USD strength which was a direct consequence of an intervention by the BoJ also weighed on investor appetite for the currency. In terms of other news flow, Portugal asked Mexico to tell fellow G20 members next week that the US should offer financial help to resolve the Eurozone sovereign debt crisis, describing it as a systemic and global problem, a Portuguese government source said. Finally, technical studies indicate that support levels are placed at 1.3975/43 and then at the 10DMA line at 1.3922. On the other hand, resistance levels are seen at 1.4172, 1.4200 and then at the 21Day Upper Bollinger Level at 1.4257.
The pair finished the session lower and traded in tandem with EUR/USD amid a broad based USD strength after authorities in Japan decided to intervene in FX markets in order to suppress persistent JPY strength. In terms of the UK related economic commentary, UK’s Business Secretary Cable said the UK can avoid a recession as the country is managing its finances properly. Elsewhere, the Treasury has held talks with the London Stock Exchange in the hope it will be able to facilitate its plans to boost companies' access to finance amid continued dislocations in the corporate credit markets. In terms of technical levels, supports are seen at the 10DMA line at 1.5941 and then at 1.5892, 1.5754. On the other hand, resistance levels are seen at the 200DMA line at 1.6139 and then at the 21Day Upper Bollinger Level at 1.6169.
After weeks of speculation, the BoJ directly intervened in FX markets to weaken the JPY which saw the pair gain around 300pips. The Japanese PM Noda said the government will intervene as necessary in the currency market to counter speculative moves in the JPY and according to latest reports, the intervention amounted to sales of yen ranging between JPY 3trn and JPY 6trn. Finally, it is worth noting that late on Friday the CFTC reported that the net JPY long position is USD 8.9bln for the week to October 25, a 104% increase for the week.