• USD/CHF +0.4%
• USD/JPY +0.4%
• NZD/USD -0.6%

USD/CHF

Dollar Data Dominates: Dollar bulls got their fill of positive data today as durable goods orders and initial claims data were released to the upside, lending to continued strength in the world's largest economy.  Notably, with durable goods orders relatively in line, initial jobless claims rose less than expected after last week's decline to the lowest level in 5 years.  Boding well for the economy, lower initial claims figures signify a tighter labor market as growth has visibly picked up in the U.S.  As a result, traders responded by bidding up the greenback in hopes that the current tightening cycle will continue well into 2006 and maintaining the profitable interest rate spread on the pair.  Subsequently, price action looks to remain relatively staid entering the asian session, as speculators look ahead to gross domestic product figures for the fourth quarter.  Contrary to earlier expectations, consensus is anticipating a slower fourth quarter leading to a downside print of overall productivity.  Should the report be to the downside, near term dollar weakness would be exacerbated along with pre-weekend squaring. 

Technically Speaking: Breaking through the consolidative ceiling at 1.2657 in the overnight, current momentum is looking weak following a textbook, yet premature, evening star formation just above the 38.2% fib at 1.2680.  Confirming the formidable resistance at 1.2718 (50% fib from the same 1.2881-1.2556 decline) is the death cross that looks to take on the 80 reference level to the downside.  With that said, current upside potential looks to be capped at 1.2757 (61.8% fib from the aforementioned decline) with imminent downside barriers at 1.2672 (10-hour moving average), 1.2657 (20-hour moving average), and 1.2632.

Rumorville: Dollar swiss bidding looks to commence beneath current spot prices at 1.2625.  Stronger considerations reside below underpinning the pair in the near term at 1.2575, daily lows from January 24th and 25th.  With stops eyed above at 1.2715, heavy selling pressure looks to enter upon 1.2750.

USD/JPY

Inflationary Data In Focus: Propping up the USDJPY currency pair was less than expected Japanese figures that were released in the overnight session.  Although one cannot ignore the overshadowing of U.S. data, the Yen releases did lend some downside expectations in the near term for the world's second largest economy.  Notably, Japan's merchandise trade balance declined 19 percent on the annualized comparison as the cost of imported energy rose over the year.  Although still sporting a surplus for the month, the disappointing data sparked notions that export volume may have declined lending to further bearishness on the underlying denomination. Separately, focusing on tomorrow's action, traders will be speculating on any signs of inflationary pressures through both Tokyo and Nationwide consumer price reports.  With previous figures still suggestive of deflationary pressures, any tick higher will more than bolster increased speculation of another consecutive month of price increases. Subsequently, this would prompt central bankers in considering the idea of a rate hike before the end of the first half.

Technically Speaking: Finding formidable resistance at the 116.50 figure, dollar momentum was cut short and looks to consolidate ahead of the Asian open.  Forming a textbook doji, bears look to re-enter and take the pair lower while testing barriers at 116.16 (10-hour moving average) and 116 (confluence of the 20-hour moving average and previous range resistance).  A break lower, here, would lead to definitive capping at the range support as it forms a secondary confluence at 115.54 with the 50-hour MA and confirms the death cross formation in the Stochastic.  Next stop for bulls would be an approach to 117.50, should the current ceiling weakly hold.

Rumorville: Yen supporters are residing around the 115.95 figure with further strength below at 115.45.  Stops are eyed above the current price at 116.50, highs hit on January 4th and 5th with heavy sell interests topping out at 117.

NZD/USD

Kiwi Bulls Offered Opportunity: Falling to the downside, Kiwi bears broke through support floors over the session after finding a formidable barrier just below the 0.6900 figure.  Currently consolidating above the 100-hour moving average at 0.6838, further incremental downside potential looms as a flurry of moving average barriers come in to play at 0.6846 (10-hour moving average) and 0.6851 (50-hour moving average) in confluence with the 38.2 percent fib at 0.6846 from the 0.6995-0.6755 decline.  With a break above, momentum looks to be bolstered by a potential Stochastic golden cross and a bottomside trendline for the price action to attempt the 0.6900 figure.

Rumorville: Initial bidding looks to resume slightly below market at 0.6815 where range support was established on January 24th.  With heavier considerations below at 0.6760, near term price action could be well supported.  Stops are eyed above the 0.6900 figure or the January 10th low with heavy considerations above at 0.6930.

Richard Lee is a Currency Strategist at FXCM.