Daily Insight; Markets Await NFP, European Crisis Not Yet Over?

Market Snapshot:

EUR: The ECB reiterates the need for historical low interest rates as Draghi states it is still too early to assume the Eurozone crisis is over. Draghi's comments contradict Barroso's prediction that the Eurozone would be out of the crisis by 2014.

GBP: BoE continue 'as per usual' by keeping the Asset Purchase Facility fixed at 375bn per month and interest rates at 0.5%. 3 of the top retails stores within UK reported disappointing Christmas sales; however this diverges from stores which have a stronger online presence.

USD: The markets eagerly await NFP later today. USD/CAD hit our interim target of 1.086 yesterday and has now stalled beneath this level. A break above 1.086-88 could be significant for the pair as highlighted in yesterday's analysis.

KIWI DOLLAR: Taking a breather before resumption of Gains?

You'll notice today the common theme is NZD. This is simply because it has been the strongest currency of the week (and year so far) and appears to be taking a breather before a suspected resumption of the uptrend.

That said we are heading into Friday, which is also NFP day. Therefor my preferred approach is to monitor these into Monday to see if you can achieve a safe entrance.

NZD/CAD: Forming Bullish Pennant?

Whilst it is too soon to declare a pennant shape, I have favoured this potential pattern because we are trading between Monthly R2 and Weekly Pivots. Add to the mix today's NFP and I see potential for price to form a minature triangle shape before volatility returns.

I favour the bullish breakout simply becuase Kiwi is the strongest currency this week and CAD is by far the weakest (across the board).
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NZD/JPY: Within established uptrend with room for another high

The projected target is approximately twice the daily range of candles produced this week, so if you prefer not to jump in before the weekend or NFP, you may be able to enter on Friday for a lower risk entry and still achieve target.

​In the event we break beneath the trendline we do have a bed of support around the monthly pivot. How price reacts here is key to the subsequent bearish move. A clear rejection would favour a new trendline to be able to be draw, however if we see small candles down here the I would favour a retracement towards the broken trendline before a resumption of losses.
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