Last week ended on heavy sell off of USD Dollar, following new unemployment data. It will be very interesting to see if volatility, and the trend, caused by this event carries over into Monday. Dollar has been trying to stage a reversal over couple of days preceding the announcements and it seems NFP put an end to it. Should USD regain these losses over next few days, chances would be good for a more decisive appreciation in fairly short order. It depends on what kind resilience, or lack of, is shown by the Dollar.

Yen pairs had a small shock of their own. New finace minister, Naoto Kan, was quoted having more comments abut the Japanese currency. This time he changed his sentiment, by retracting former statement calling for weaker Yen. That’s a serious change of heart. Of course, foreign exchange remarks by Japanese officials are frequent, more so than coming from any other country, so should be taken with a healthy degree of detachment. After all not a day goes by when somebody from extensive Japanese political establisment has something to say on the subject. More cynical observers could say that perhaps they are securing comfortable retirement, having friends and family stay busy placing orders while they are getting vocal in media outlets. One of the scenarios when public and private interests go hand to hand, right?

Comments or not, strength in Yen would fit into current technical picture, at least on intermediate bases. That picture is different from cross to cross, as other currencies were the driving force most recently, while JPY behaved has been rather quiet, with little movement of its own, until Mr. Kan got involved. It is best seen on longer term charts, like daily which are very different form cross to cross. For example, AUD-JPY has reached previous high of about 85.50, but has stalled at just above that level on Friday. European currencies have been lagging behind and are stuck in the middle of wider ranges, demonstrating lack of direction. At the same time CAD-JPY is extended even more than AUD-JPY, but also ran into resistance established even earlier.

We can see this prolonged uptrend, which is somewhat overextended, by comparison to the most recent price history. I’m not equating it to huge runs of 2008- early 2009, because market conditions have changed and current moves can’t be judged by the same criteria. In light of current events, this is a “mature” move. Seen in this context, emergence of fairly strong bearish candlestick on Friday could have strong negative implications.

Short term charts are more alike. This hourly graph of CAD-JPY looks like many other ones, having slightly bearish bias. Support is established at roughly 89.00 level. If broken, it is a sell. Meanwhile I’ll be looking for gaps to open the week with. This is true for all Yen pairs. Should they happen, typical strategy will be used. This will also give some clues for next short term moves. My bias is bearish.

Aussie and Kiwi pairs are acting as if they are running out of steam. Nothing has been decided yet, but they have enjoyed prolonged directional moves and some pullback would be normal. EUR-NZD is in the process of building possible bottom on short term charts. Past reversals turned out to be failures, which makes it more likely for any next one to be more successful. I’d like to buy it on a move above 1.9640, with about 150 pips objective.

Australian Dollar could be a sell, too. AUD-CHF hourly chart presents good set up for a short at 0.9435. Target is fairly small about 55 pips. If these trades happen, I’ll look for larger objectives using intermediate term charts. For now these are short term plays. At the same time I will continue to buy breakouts in Canadian Dollar pairs, just like last week, focusing on GBP-CAD and EUR-CAD. It should be a busy week. Let’s just hope that activity turns into profits.

Mike K.