USD/JPY - to consolidate with bearish bias amid broadly weaker USD undertone (ICE spot dollar index last 77.02 vs 77.75 early Tuesday) as improved investor risk sentiment (VIX fear gauge eased 9.73% to 17.63) on optimism over global economic outlook and strong Wall Street gains overnight (DJIA up 1.25%, Nasdaq up 1.89%), helped by upbeat UK and eurozone PMI data, as well as stronger-than-expected rise in U.S. ISM manufacturing PMI to 60.8 in January (highest since May 2004) from 58.5 in December (vs 58.0 forecast) reduced allure of safe-haven dollar. Spotlight on 1315 GMT U.S. January ADP National Employment Report (jobs tipped to have risen by 143,000 following 297,000 increase in December). USD/JPY also weighed by Japan exporter sales; expectations U.S. unlikely to raise interest rates before Europe, UK and Australia. But USD/JPY losses tempered by higher U.S. Treasury yields (10-year up 6 bps), USD demand for import settlements, JPY-funded carry trades amid improved investor risk appetite; fear of Japan MOF JPY-selling intervention. Other data: 2350 GMT Japan January monetary base, 2230 GMT Fed's Duke speaks. USD/JPY daily chart negative-biased as MACD & stochastics bearish, although latter at oversold, suggesting sideways or lower USD/JPY trading near-term. Support at 81.29 (yesterday's low); breach would expose downside to 80.93 (Jan. 3 low), then 80.50 (Nov. 9 low), 80.21 (15-year low set Nov. 1), psychological 80.00 and 79.75 (record low set on Apr. 19, 1995). Resistance at 81.91 (hourly chart), then at 82.14 (yesterday's high); breach would temper near-term negative outlook, targeting 82.26 (Monday's high), then 82.93 (Friday's high), 83.20 (Thursday's high) and 83.50 (Jan. 11 high).
EUR/USD - to consolidate with bullish bias after hitting 12-week high of 1.3844 yesterday. Pair supported by growing expectations for eurozone interest-rate hikes in coming months to combat inflation; diminished concerns over eurozone debt situation as speculation increases that policy makers will come up with credible plan to resolve crisis in March; surprise rise in final eurozone manufacturing PMI to 9-month high of 57.3 in January from 57.1 in December (vs 56.9 preliminary reading and 56.9 forecast); lower-than-expected eurozone December unemployment rate of 10.0% (vs 10.1% forecast). But EUR/USD gains tempered by positions adjustment before tomorrow's ECB interest rate announcement. Data focus: 1000 GMT eurozone December PPI. EUR/USD daily chart mixed as MACD bullish, but stochastics bearish at overbought. Resistance at 1.3844 (yesterday's high); breach would expose upside to 1.3950 (76.4% Fibonacci retracement of 1.4283-1.2871 Nov. 4-Jan. 10 decline), then psychological 1.4000 and 1.4281 (Nov. 4 top). Support at 1.3759 (previous cap set Thursday); breach would expose downside to 1.3700 (hourly chart), then 1.3567 (Monday's low), 1.3536 (Jan. 24 low), 1.3515 (100-day moving average) and 1.3445 (Jan. 21 low).
AUD/USD - to consolidate with bullish bias. Pair underpinned by AUD demand for long-AUD carry trades on improved investor risk appetite, buoyant commodity prices (CRB spot index closed up 0.75 yesterday at 342.17). But Aussie gains tempered by lingering concerns over further Chinese monetary policy tightening. AUD/USD daily chart positive-biased as MACD & stochastics turned bullish after strong spot gains yesterday; bullish parabolic stop-and-reverse signal hit at 1.0072 yesterday. Resistance at 1.0151 (yesterday's high), then at 1.0171 (Jan. 4 high); breach would expose upside to 1.0253 (post-float high set Dec. 31), then psychological 1.0300 level. Support at 1.0041 (hourly chart); breach would expose downside to 0.9960 (yesterday's low), then 0.9864 (Monday's low, near 100-day moving average), 0.9857 (Jan. 24 low) and 0.9828 (Jan. 20 reaction low).
NZD/USD - to consolidate with bullish bias. Pair underpinned by NZD demand for long-NZD carry trades on improved investor risk appetite, firm commodity prices; but gains tempered by lingering fears China may tighten monetary policy further. NZD/USD daily chart positive-biased as MACD bullish, while stochastics reverting to bullish mode near overbought; 5- & 15-day moving averages rising. Resistance at 0.7821 (yesterday's high); breach would target 0.7835 (Nov. 22 reaction high), then 0.7872 (Nov. 11 high) and 0.7976 (Nov. 4 top). Support at 0.7745 (hourly chart), then at 0.7707 (yesterday's low); breach would temper near-term positive outlook, exposing downside to 0.7681 (Monday's low), then 0.7668 (Thursday's low), 0.7641 (Jan. 26 low), 0.7618 (Jan. 25 low) and 0.7558 (Jan. 24 low).
GBP/USD - to consolidate with bullish bias after hitting 11-week high of 1.6164 yesterday. Pair supported by positive global risk sentiment, record UK January manufacturing PMI of 62.0 (vs 57.9 expected), UK NIESR saying BOE may raise interest rates in the spring. But GBP/USD gains tempered by lingering concerns over negative impact of UK government's fiscal tightening measures on economic growth. Data focus: 0930 GMT UK January CIPS Construction PMI. GBP/USD daily chart positive-biased as MACD & stochastics bullish, although latter at overbought; 5- & 15-day moving averages rising. Resistance at 1.6164 (yesterday's high); breach would target 1.6183 (Nov. 12 reaction high), then 1.6300 (Nov. 4 reaction high), 1.6457 (Jan. 19, 2010 reaction high) and psychological 1.6500 level. Support at 1.6080 (hourly chart); breach would expose downside to 1.6008 (yesterday's low), then 1.5821 (Monday's low), 1.5792 (100-day moving average), 1.5768 (Jan. 26 low) and 1.5750 (Jan. 25 low).
USD/CHF - to consolidate with bearish bias. Pair undermined by broadly weaker USD undertone; but losses tempered by short-CHF carry trades on improved investor risk appetite, CHF sales on firmer EUR/CHF cross, fear of SNB's CHF-selling intervention - central bank vice president Jordan said overnight Switzerland's economy still struggling to overcome effects of Swiss franc's appreciation. Daily chart negative-biased as MACD bearish, while stochastics stay suppressed at oversold, suggesting sideways or lower USD/CHF trading near-term. Support at 0.9333 (yesterday's low); breach would target 0.9316 (Jan. 3 low), then 0.9301 (Dec. 31 record low) and psychological 0.9200. Resistance at 0.9456 (yesterday's high); breach would temper near-term negative outlook, targeting 0.9470 (Friday's high), then 0.9481 (Thursday's high), 0.9523 (Jan. 25 high), 0.9632 (Jan. 24 high, matching downtrend line from Dec. 1 high of 1.0066) and 0.9668 (55-day moving average).
USD/CAD - to consolidate with risks skewed lower. Pair undermined by improved investor risk appetite, weaker USD sentiment; but losses tempered by softer oil prices (Nymex crude settled down $1.42 yesterday at $90.77/bbl); comments from Canadian Finance Minister Flaherty that Canada's economic recovery remains fragile and there's "resistance" to unemployment rate coming down. USD/CAD daily chart mixed as MACD bullish, but stochastics have turned bearish near overbought. Support at 0.9896 (yesterday's low); breach would target 0.9884 (Jan. 19 low), then 0.9827 (Jan. 18 low), 0.9816 (May 21, 2008 reaction low) and 0.9708 (Feb. 28, 2008 reaction low). Resistance at 0.9991 (yesterday's high); breach would expose upside to 1.0057 (Monday's high), then 1.0115 (Dec. 24 high) and 1.0165 (Dec. 23 high).
EUR/JPY - to consolidate. Cross supported by improved investor risk appetite, Japan importer demand, diminished eurozone debt worries. But EUR/JPY gains tempered by Japan exporter sales; worries over further Chinese monetary policy tightening. EUR/JPY daily chart mixed as MACD bullish, but stochastics bearish at overbought. Resistance at 112.70 (yesterday's high); breach would target 112.95 (hourly chart), then 114.00 (Thursday's high), 114.95 (Nov. 22 reaction high), and 115.42 (Nov. 4 reaction high). Support at 111.86 (yesterday's low); breach would target 111.39 (Monday's low), then psychological 111.00 (roughly matching previous cap set Jan. 14), 110.59 (55-day moving average) and 110.30 (Jan. 20 low).
EUR/GBP - to consolidate. Daily chart mixed as stochastics bearish near overbought but MACD in bullish mode, bullish hammer candlestick pattern completed yesterday. Resistance at 0.8570 (yesterday's high); breach would expose upside to 0.8619 (Monday's high), then 0.8653 (Friday's high), 0.8672 (Jan. 26 high), 0.8817 (Nov. 4 reaction high) and 0.8941 (Oct. 25 top). Support at 0.8531 (hourly chart), then at 0.8507 (yesterday's low); breach would expose downside to 0.8489 (Jan. 24 low), then 0.8458 (Jan. 21 low) and 0.8410 (Jan. 20 low).
-By Jerry Tan, Dow Jones Newswires; (65) 6415-4046; Jerry.tan@dowjones.com
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