This is something which we saw regularly in the last few weeks with Asia generally looking to sell the USD regardless of what happened overnight.

EUR/USD has made a fresh session high above 1.3250 and USD/JPY has made a fresh session low at 82.50.

The SSEC is down 1.25% today following on from the 1.9% fall yesterday.

The AUD/USD is holding up pretty well as the market looks to sell USD across the board. USD/JPY is gradually sliding lower as it nears technical support near 82.40.

I think these guys must also be glued to ForexLive and they realise that those big stops below 82.30 are inching closer and closer.

Sharp Yen rises need to be avoided and Japan is watching FX moves closely (over Reuters newswires)

• That is slightly better than the -0.6% forecast
• November jobless rate as expected at 5.1%

USD/JPY is unchanged at 82.80.

• EUR/USD: Light stops mixed in with sell orders between 1.3180/00 with sell orders getting heavier towards 1.3200. Heavy stops reported above 1.3220 at regular intervals.
• USD/JPY: Stops below 82.30, supposedly heavy
• EUR/GBP: Solid sell orders still in place .8560/75, stops starting through .8580
• EUR/JPY: Stops either side of the market, above 109.70 and below 108.30

The Sovereign interest that has been reported over the last few sessions involved primarily ACBs buying EUR/USD and selling USD/JPY.

There was Sovereign interest to buy EUR/USD below 1.3100 earlier today in Asia and whilst the amounts probably weren’t overly large, it was enough to drive a very illiquid market quickly higher. The late mail out of NY on Friday was that the next batch of heavy offers were situated close to 1.3200.

Some of the Asian central banks have also been unusually active in USD/JPY over the last few days and I’m sure that the BoJ aren’t too happy to see them selling down at these levels. Just to repeat, there are reportedly some large stops positioned below 82.30.

Elsewhere, the teflon AUD/USD has bounced straight back after the earlier losses brought about by the Chinese rate hike. It looks to be too early to try shorting this pair.

USD/JPY has disappointed the bulls over the last two weeks after rising US rates and Korean-peninsula tensions had encouraged many to take long positions. Some of these started bailing out last week and the die-hard stops are now building below 82.30.

Support levels to watch in the JPY crosses are EUR/JPY 108.30 and GBP/JPY 127.40 and 126.40.

AUD/USD closed in NY at 1.0040 and has opened 50 pips lower in early interbank trade. The other majors are unchanged from their Friday closes with EUR/USD at 1.3110, cable at 1.5440 and USD/JPY at 82.85.

Australian markets are closed today although many of the interbank players will be at work, and most Asian regional centres are open as usual.

Reuters is reporting that Japan will look to increase the ceiling for JPY borrowing specifically for FX intervention by 5 trillion in 2011/12. This will give them ammunition in the order of 35 trillion JPY. Remember that Japan spent just over 2 trillion JPY on intervention on September 15th. There is a train of thought in the market that Japan will do something extra special early in 2011 to try and drive USD/JPY back towards parity.

Here’s what I’m thinking. It’s Christmas Eve so we either get a totally boring day where nothing happens or else we get a really sharp move somewhere. EUR/USD looks to me to be a short-term sideways consolidation which will eventually break lower again and USD/JPY has also a bearish feel as bulls start to give up. Therefore there’s a chance that EUR/JPY might break lower and if it gets below support at 108.25, I’m guessing that the selloff might gather serious momentum. Both EUR/USD and EUR/JPY are currently working through some oversold momentum readings but when that’s done, this pair might be worth a short? On the other hand, it is Christmas Eve so perhaps we should just put our feet up

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