Morning forex briefing

The USD is weaker this morning as traders continue to square books ahead of the US Thanksgiving Holiday; traders note stops across the board with real-money accounts showing interest from both sides. Rumors that the BOJ had asked some exporters to sell USD/JPY were quickly denied by the central bank but did not help perceptions that the Yen was under buying pressure. European Union spokesman Juncker said at a press conference that the Yen had fallen far enough and that the Chinese Yuan should be valued higher. Traders took this as a signal that the central banks may be in agreement that the time is right for a sustained advance in the Asian currencies.

USD/JPY is sharply lower to start New York with a low print at 116.93 but rumors of semi-official and real money accounts on the bid near the lows may have halted the slide. Analysts remind that technical support is also around the 116.90 area and may offer a bounce during the day ahead of the holiday.

Following in sympathy with USD weakness, Cable has rallied to the 1.9100 handle; high print 1.9103 before sellers capped. Traders note that short-covering and stops were evident on the move higher triggered at 1.9060 area and 1.9080 area of technical resistance. Now that the barrier is cleared analysts suggest that the GBP has room for a further advance toward the 2006 high at the 1.9180 area but also warn that the time of the year may make upside progress more difficult as book-squaring and thinner conditions make for more nervous markets. Volatility in the GBP
may get a bit larger now that the rate is flirting back at the highs; look for
solid two-way trade starting next week.

EURO has
rallied into technical resistance at the 1.2880 area in solid trade but volumes
remain lighter and traders expect a pullback from this area at least once.
Although a high print at 1.2896 suggests the rate has cleared offers at the
1.2880 area analysts remind that semi-official and real money accounts were seen
on the offer suggesting that the rate has over-extended it’s rally this time;
there has been no pullback during the rally from the 1.2500 area to 1.2900 area
of any significance and traders may be playing it safe now that the top of the
recent range has been reached. Look for a pullback from here in EURO. Up next is
the holiday, look for things to get really quiet the next few days—