• EUR/USD -0.8%
• USD/CHF +0.9%
• USD/JPY +0.7%

EUR/USD

Dour Data Hits Euro Hard: Offers were abound on the euro underlying as economic data was less than exemplary of a rebounding economy.  In the overnight, manufacturing data hinted at a potential slowdown in the near term as all but one regional survey missed the mark.  The sole survivor was the PMI report released through German officials.  Being the areaââ,¬â"¢s largest economy, the better than expected figures serve to offset some of the less fortunate countries.  Nonetheless, market participants battered the currency pair lower in favor of U.S. dollar bullish data involving higher construction levels and sustained manufacturing activity.  Paring of euro positions also looks to ensue as we approach tomorrowââ,¬â"¢s anticipated European Central Bank rate announcement.  Expected to keep rates at 2.25 percent, traders are siding with slightly more dovish siding on subsequent statements.

Rumorville: Bids at 1.2060 and 1.2050 are keeping the current price from bottoming out with stops slightly below.  Further bid interest can be seen at 1.2040/45 providing a temporary support level heading into the Asian session.  Comparatively on the upside, offers reside at 1.2115 with further selling capacity at 1.2140.

USD/CHF

Further Carry Interest Boosts Greenback: With this morningââ,¬â"¢s data prompting rising speculation of higher interest rates, traders reinitiated carry trades in the USDCHF currency pair.  Although not known for carry trade potential, dollar bulls can still earn a carry of 350 basis points as opposed to the dwindling differential of the previous favorite, GBPUSD.  Subsequently, volatility seems the theme for the rest of the week as investors look for opportunities to re-initiate positions along side additional U.S. economic reports later this week.  Bidding on retracements, trader activity will be capped with the upcoming non-farm payrolls report, factory orders and consumer confidence.

Rumorville: Offers at 1.2900 and 1.2925 are keeping the current spot value under with small stops above the 2900 handle.  However, larger stop positioning looks to reside above should the current resistance be broken.  Keeping the underlying comparatively bid, trader interest resides at 1.2840 and 1.2800.

USD/JPY

Buy On The Bounce: After yesterdayââ,¬â"¢s slight retracement, investors bid the greenback higher against the Japanese yen in hopes of re-entering the popular carry trade of 2005.  Hoping to continually capture the widened interest rate spread, traders furthered yen selling efforts in order to earn 450 basis points of interest, following the most recent Fed meeting.  Now with the currency pair hovering at the 118 figure, upside potential still remains a dominant theme as the calendar of events offers a dearth of Japanese economic data.  As a result, expect further yen paring as the week progresses on additional examples of U.S. economic fundamentals. 

Rumorville: Speculation surrounds the rumored option barrier at 118.20 in sparking the higher than normal intraday activity.  Offers remain above that barrier at 118.50 with further selling pressure residing at 119 even.  Comparatively to the downside, bids hover the 117.75/80 region keeping the underlying underpinned.

Richard Lee is a Currency Strategist at FXCM.