Talking Forex Daily FX Wrap 13/12/2011

EUR/USD
The pair finished the session lower after Merkel rejected raising upper limits of funding for ESM bailout mechanism according to sources in the ruling coalition, while Moody's has put the ratings of eight Spanish banks and two holding companies on review for possible downgrade. Of note, the latest German ZEW Survey Current Situation component missed expectation, while the Economic Sentiment component posted a modest gain. In terms of technical levels, supports are seen at 1.3145, 1.3088 and then at 1.3046 which is the 61.8% Fibonacci retracement of the 1.1876-1.4940 move. On the other hand, resistance levels are seen at 1.3356 and then at the 21DMA line at 1.3389.

GBP/USD
The pair finished the session lower after BoE’s Dale hinted that the central bank will be willing to embark on additional QE. Of note, the latest CPI report came in inline with expectation. In terms of other UK related commentary. RICS reported that British house prices fell at a slower pace in November as buyer interest picked up modestly. Separately, Britons’ employment prospects are at their bleakest in three years, a quarterly survey by recruitment firm Manpower suggested today, with employers planning no net increase in jobs over the next three months. Technical supports are seen at 1.5526, 1.5469 and then at the 21Day Lower Bollinger Level at 1.5445. On the other hand, resistance levels are seen at 1.5658, 1.5735 and then at the 55DMA line at 1.5750.

USD/JPY
The pair settled the session little changed in spite of the never ending concerns surrounding the Eurozone after Merkel rejected raising upper limits of funding for ESM bailout mechanism according to sources in the ruling coalition. Separately, the BoJ supplied USD 4.7bln in 3-month operation, the biggest since the BoJ reinstated the dollar facility in May 2012 in the wake of the Greek debt crisis.