2012 is starting on a small positive note, as EUR/USD is struggling to break through lows seen a year ago at 1.2855/60. The risk is for near-term consolidation, given that momentum in EUR/JPY is also stretched to the downside and near levels last seen in October 2008.
A Bearish Reversal in German bunds and buoyancy within ranges in the DAX and AUD/USD add to the evidence for near-term stability. Bigger picture however, we view such moves as temporary given the breakdown in EUR/AUD (highlighted mid-December), which reflects the broader ongoing trend of EUR weakness, particularly on the crosses.
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TECHNICAL RESEARCH