Week of 1/9
EUR/USD (Daily)
As the dollar finished out a strong week across the board and investors continued to sell euros, the pair fell to its lowest level since September 2010. Has been in this channel since the end of October and it doesn't look like its in any hurry to break out of it this week. Next major support is around 1.2600 and unless some especially bad news comes out of the Eurozone this week (bad Merkel/Sarkozy talk, ECB rate change, etc.) I think we'll remain above this level. The euro is already pretty heavily shorted, so keep that in mind.
GBP/USD (Daily)
The daily range has began to tighten between the falling trendline and the 1.5350 area. Dollar strength has brought the pair near a retest of this 1.5350 area which has held up well in the past 4 months. GBP trade balance on Wednesday and the rate decision Thursday should provide some volatility and give a sense of direction for this pair for the early part of the year. I would be surprised to see any pound strength this week that would break the downtrend.
AUD/USD (Daily)
Risk has been back on in the past month and a half, and the AUD has started to slowly move higher. The SPYs are nearing resistance around 128 and AUD/USD is still holding underneath its 200 DMA. The currency and equity markets were somewhat disconnected this past week, so we'll see if strong equity markets can lead the Aussie higher. A break of the 200 DMA (which is also near past support around 1.0450) could give us some room to move significantly higher.
