EURUSD: On target to test the psychologically important 1.3500

!! EUR/USD !!
Despite starting the week with a Bearish tone amid reports in Der
Spiegel which suggested that the policy makers are pushing Portugal
into seeking monetary assistance, the pair finished the week higher
following a round of well received government paper auctions by the
Spanish, Portuguese and Greek debt agencies. In addition to that, the
upward trend was supported by reports that the ECB gained EU
Parliament support to toughen the budget law and are potentially open
to discuss the option of raising the effective lending capacity of the
EUR 440bln rescue fund. Furthermore, Japan has joined China in showing
support for the Eurozone and indicated that it is prepared to buy
substantial amount of Eurozone debt. This week also saw the ECB keep
the interest rate unchanged at 1%, while during the press conference
the head of the central bank spoke of risks from failing to return to
a prudent policy and also acknowledged that headline inflation
readings may rise further. Looking at this weeks' price action in
terms of technical levels, the pair closed above the 200DMA at 1.3071
and remains on target to test the psychologically important 1.3500.

!! GBP/USD !!
The pair finished the week higher and in part benefited from the
perception that the EU policy makers will be able to contain any
spreading of the European sovereign crisis. The currency also gained
on the back of a U-turn by the EU policy makers who are now prepared
to expand the use of the European Financial Stability Facility (EFSF),
which also supported the UK banks, known for their heavy exposure to
the Iberian Peninsula. Nevertheless, the outlook for the pair remains
somewhat bleak, which was highlighted this week by generally weak
macro-economic releases. Still, Moody's Investor Services noted that
the UK government's ambitious program means the country should
maintain its cherished AAA credit rating despite slower than expected
economic growth forecasts. In terms of technical's, to the upside a
major resistance level is seen at 1.5935 which also the 61.8%
Fibonacci retracement level of the 1.6300-1.5345 move.

!! USD/JPY !!
The pair remained volatile for much of the week but finished little
changed around 83.00 mark in part due to a very large digital expiry
which expired on Friday. The price action was largely a by-product of
risk-on/risk-off investor sentiment as markets fretted over whether
the EU policy makers will be able to provide the much needed stability
for the Iberian Peninsula. Worth noting that this week saw Japan's PM
Kan appoint, Kaoru Yosano, a fiscal hawk to a key post and replaced
his deputy in a cabinet revamp to cope with a divided parliament and
tackle reforms to rein in public debt. Kan retained, Finance Minister
Yoshihiko Noda, Foreign Minister Seiji Maehara and Defence Minister
Toshimi Kitazawa. Also, according to press reports, the BoJ is said to
revise its growth forecast for fiscal 2010 from 2.1% to around 3% in
price-adjusted terms and to maintain its position that the pace of
price declines will gradually slow. In terms of technical levels, the
pair closed above the Ichimoku Cloud Base at 82.31 but the outlook
remains bearish with supports further below seen at 81.88 and 81.61.
Source: Fxstreet.com