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By XE Market Analysis February 6, 2014 6:48 am
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    XE Market Analysis: North America - Feb 06, 2014

    The USD is marginally firmer versus the other currency majors after quite session in Asia and the European AM. Stock markets saw a further recovery, though market participants were being cautious ahead of the ECB and BoE announcements, both of which may bring market-moving statements, and with tomorrow's U.S. jobs release starting to loom large. The AUD popped to three-week high of 0.8980 during the Sydney session on a set of firm Australian data, since settling around 0.8950. USD-JPY and EUR-JPY are fractionally higher at 101.53-55 and 137.33-35, with the backdrop of steady stock markets having brought a halt the recent firming trend of the yen. BoJ Deputy Governor Nakaso said that Japan is on course to make its 2% inflation target. EUR-USD continued to consolidate recent losses in the low-to-mid 1.35s.

    [EUR, USD]
    EUR-USD has continued its consolidation around 1.3500, oscillating around the 200-day moving average. The big picture technical view still looks bearish. The euro made a close under the 200-day moving average last week for the first time since last July, and projections from a two-month trendline imply a target of 1.3445-1.3450. Resistance comes in at 1.3550 and 1.3574-1.3581 (encompasses the Jan-31 high and the 20-day moving average).

    [USD, JPY]
    USD-JPY has settled above 101.00 with the yen's advance has come to a halt as the risk-off theme took a breather, following Wall Street's lead, with the MSCI Asia Pacific index showing a 0.5% gain and the Nikkei 225 a 1%+ rebound, with corporate earnings both Stateside and in Asia having helped stop the rot. Expectations for a decent U.S. payrolls report this Friday have been a factor too. Big picture, USD-JPY support comes in at 100.00-100.36, the latter of which is the 200-day moving average. Initial resistance levels come in at 101.76-102.00, while trend resistance is above here at 102.40. Resistance can also be expected at 102.80-103.00..

    [GBP, USD]
    Sterling recoiled following the services PMI disappointment out of the U.K on Wednesday, which unexpectedly dipped to 58.3 in January, the lowest since last June and fitting the emerging picture of moderating recovery momentum after a period of above-trend growth. The outcome more than offset the much stronger than expected construction PMI, as construction accounts for only about 7% of GDP while services account for over 75%. The technical picture is bearish following Cable's double rejection from forays above 1.6600 in late January, and the subsequent breach below both the 20- and 50-day moving averages. We target the 1.6200-1.6220 area, with resistance marked at 1.6344-50.

    [USD, CHF]
    EUR-CHF has been flirting with 1.2200 amid the backdrop of risk aversion in global markets, though the early-week steadying in stock markets has lent the cross some support. The Dec-17 cycle low of 1.2167 remains in scope. SNB-speak affirming that a removal of the 1.20 limit would only be considered if inflation was much higher has had little impact, though we don't advise speculative accounts to hold long CHF exposures below 1.2100 given the threat of SNB intervention ahead of 1.2000.

    [USD, CAD]
    USD-CAD looks to be in the early stages of forming a topping formation. Last week's run to a five-week peak of 1.1224 came with declining bullish momentum, which is a sign that the underlying trend is weakening. Resistance is marked at 1.1175 and 1.1200, which would look to hold on a daily closing level basis to confirm potential of a topping formation in development. Key support is at 1.1000-1.1030, which encompasses as cluster of recent daily lows and highs.

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