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FXPRO INTRADAY SNAPSHOT

EUR/USD

Extends the setback off last Friday's high at 1.2780 following the probe below 1.2659, and is close to key support levels at 1.2632 and 1.2608. 1.2632 represents the 76.4% retracement level of the four-day 1.2588/1.2780 rally, and the 1.2608 higher low will look to defend the August 24 low at 1.2588. The 1.2716 level has become near-term pivotal resistance, and only above there would provide respite; opening 1.2740.

GBP/USD

The setback off last Friday's high at 1.5597 is closing in on support at 1.5443, and the support line of a bull flag lies at 1.5421 for Tuesday. GBP bulls will be keen to keep 1.5421 intact; to build on the positive weekly doji candle which touched a low of 1.5371, and is protected by a higher low at 1.5389. A break above 1.5535 is required to lift the tone and re-open the 1.5575/1.5597 highs.

USD/JPY

The sharp bear wave off Monday's peak at 85.91 is probing beneath 84.27, and is creating scope for a return to the August 24 15-year low at 83.58. A wave equality target lies just below there at 83.48. Only regaining ground above the 84.84 lower high would question the bearish outlook; opening 85.05 and 85.16.

AUD/USD

Corrects lower off Monday's high at 0.9029 after confirming a bear failure low at 0.8770, and support at 0.8895 is expected to limit consolidation Tuesday. A break above 0.8975 would bring the focus back onto the 0.9029 high, and threaten further strength towards the August 17 lower high at 0.9079. Only below 0.8895 would concern bulls and re-expose the 0.8770 low.

FXPRO FOCUS

Which central bank will intervene in the currency markets first: the Swiss National Bank or the Bank of Japan? The chance that either will come into the market to tackle the soaring yen or franc is enough to put many traders off buying either currency against the dollar or the euro. That means that buying one against the other in a "who will blink first?" trade is happy hunting ground for the brave. This is, perhaps, a sign of how desperate currencies analysts are getting for good trades. Almost all major currencies [and indeed commodity-linked and emerging-market currencies too] are flashing bright red sell signals at the moment, so analysts and investors are forced to come up with some pretty creative ideas. It does make sense, though, so it's worth weighing up the two. By one measure, the Swiss are the more likely to take the plunge. After all, in real terms, the franc is stronger now than the yen, BNP Paribas pointed out in a note to clients last week. Some market-watchers believe that means the Japanese authorities will sit back and watch the yen climb much more--as long as it's a slow and steady move--before they try to flog it back down. Still, even though the franc is now at an all-time high against the euro, which Monday sank below CHF1.2950 for the first time, few if any serious franc-watchers think a sting is coming.

EUROPE

Foreign exchange markets were showing signs of deep unease about the health of the global economy Tuesday, with currencies seen as safe refuges climbing at the expense of riskier bets. Concerns that the U.S. may be sliding back into recession continue to hamper market sentiment, and steps by Japanese authorities to kickstart the domestic economy have left market-watchers nonplussed. The result is distinctly nervous trading patterns. In line with this tone, the Swiss franc--arguably the market's premier safe retreat--marked a new record high against the euro. The single currency fell to just under CHF1.29, having broken below its previous all-time low of CHF1.2971 in Asian trading hours. Analysts see little scope for intervention by the Swiss National Bank to push the currency back down. The franc was also broadly higher, rising to a seven-month high against the dollar, and to its highest level against sterling since January 2009. Despite concerns about the U.S. economy, the dollar's perceived role as a safe haven kept it well-supported in European trading hours. The euro slipped to $1.2625 before rebounding slightly. Focus was on the Japanese yen which rose against the dollar and euro before retreating slightly. Monday's move by the Bank of Japan to inject further funds into the country's financial system in an effort to support the economy and, many argue, to weaken the currency, have fallen flat.

ASIA

The euro and the dollar fell against the Japanese yen in Asia Tuesday as poor Asian stock performances prompted regional short-term players to buy the safe-haven yen, while Japanese exporters bought the unit for month-end settlement. The yen's rise also came amid lingering views that the Bank of Japan's monetary easing steps Monday weren't aggressive enough to stem the yen's recent strength. The central bank's policy board said at an emergency meeting it will lend another Y10 trillion in six-month funds at a fixed rate. "Players have become risk-averse due to poor stock performance," fleeing for the yen, considered the least risky currency, said Akihiro Tanaka, a senior trader at Resona Bank. Japanese exporters who couldn't sell the dollar in recent days because the BOJ moves also pushed down the dollar and the euro versus the yen, he added. Other traders said the BOJ's easing wasn't impressive enough to reverse the yen-bullish sentiment. "Players are disappointed by the BOJ's moves. Some say the timing was late," said Yuichiro Harada, a senior trader at Mizuho Corporate Bank. Japan's finance minister Yoshihiko Noda Tuesday defended the BOJ from such criticism, suggesting he may refrain from demanding more monetary easing for some time.

WORLD

The dollar declined against the yen Monday after moves by the Bank of Japan to stem the currency's appreciation fell flat. The greenback also lost ground to the Swiss franc but gained against other widely traded currencies, as investors nursed worries about the global recovery and abandoned last week's move into riskier assets. The dollar erased strides made ahead of Monday's emergency BOJ meeting. Investors had sold off the yen on expectations that stronger measures than an extension of the BOJ's loan program would be announced. "The markets were not impressed," said Vassili Serebriakov, foreign exchange strategist at Wells Fargo in New York. Investors took the view that the BOJ steps weren't really new and were therefore already priced into the yen's current value. However, thin market conditions because of a U.K. holiday tended to contain the dollar's losses. "The bias for the market is to take the yen higher," Serebriakov said. "Our sense is that we are going to see a retest of [last week's] 15-year highs and perhaps new highs beyond that." The greenback remains close to the 15-year low it hit last week and is only about four yen above the all-time low at Y79.75 from April, 1995. Late afternoon, the dollar was at Y84.55 from Y85.35 late Friday, according to EBS via CQG.

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