"Despite the PBoC’s efforts to support growth via domestic demand, Chinese exports remain vulnerable to weak demand in the EU; its main trading partner.   Not only that but reports of increased central bank diversification into the AUD refer to previous periods.  Given liquidity concerns, there are no guarantees that this demand will continue to gather pace.  Indeed, if confidence in the coherence of EMU increases in 2013, diversification trades could stagnant or even reverse if EUR…

Royal Bank of Scotland - EURUSD Rangey with a bearish bias

UBS - "EURUSD BULLISH Near-term resistance is at 1.3072, a break above would signal resumption of strength opening the way to critical 1.3172. Support lies at 1.2878/04.
USDJPY BEARISH A break below 77.99 would reinforce the bearish themes opening the door to 77.44/13. Resistance is at 78.87 ahead of 79.22."

The Eurogroup leaders launched the Euro Zone's permanent bailout fund, the European Stability Mechanism at their meeting in Luxembourg yesterday, amidst concerns over Greece and Spain. Uncertainties over the bloc's fourth largest economy even increased after some European leaders said that Spain does not need help because the government is not asking for any help in the first place. This led to the decline of the Euro versus the US dollar in yesterday's European trading exchanges.…

Goldman Sachs - Dollar Crosses

Current*; 3-Month Horizon Forward Forecast; 6-Month Horizon Forward Forecast; 12-Month Horizo; Forward Forecast; 5-Yr Forecast**

G3

EUR/$ 1.29 1.29 1.25 1.29 1.33 1.30 1.40 1.18

$/JPY 78.53 78.46 77.00 78.38 76.00 78.16 74.00 108

EMEA

£/$ 1.61 1.61 1.52 1.61 1.53 1.61 1.61 1.51

$/NOK 5.76 5.78 5.92 5.80 5.41 5.84 5.00 6.34

$/SEK 6.69 6.71 6.88 6.72 6.39 6.74 5.93 7.09

$/CHF…

Bank of America Merrill Lynch - Quarterly forecasts

Dec-12 Mar-13 Jun-13 Sep-13 Dec-13

G3

EUR-USD 1.31 1.23 1.22 1.21 1.20 1.20

USD-JPY 79 78 80 82 84 85

EUR-JPY 103 96 98 99 101 102

Dollar Bloc

USD-CAD 0.97 1.02 1.02 1.01 1.01 1.01

AUD-USD 1.03 1.01 0.98 0.98 0.96 0.94

NZD-USD 0.82 0.80 0.79 0.79 0.78 0.78

Europe

EUR-GBP 0.81 0.78 0.80 0.79 0.78 0.78

GBP-USD 1.62 1.58 1.53…

Royal Bank of Scotland - "EUR/USD: Friday’s doji reversal should weigh heavy on price action

SUP: 1.2959 1.2823 1.2747 1.2701

RES: 1.3172 1.3284

Strategy: Short here, stop through Friday’s high at 1.3090 and target 1.2823 overall

GBP/USD: Keep wider stops and fade any further rallies

SUP: 1.6071 1.5951

RES: 1.6261 1.6302/09

Strategy: Medium term shorts to 1.56 on a stop above 1.63 at 1.6330, short term positions with a stop above 1.6146 targeting…

Danske Bank - "EUR/USD - Builds for a challenge on 1.3486/91 and 1.3833

Strategy Summary - Stay long or buy on dips for further gains to 1.3491 & possibly 1.3833. Place a stop under either 1.2740 or 1.2607.

EUR/PLN - A fresh medium term down leg is favoured to start unfolding

Strategy Summary - Look to sell for a medium term bear extension through 4.0255, towards the 3.8840/3.8220 region. Place a stop above…

UBS - "EURUSD BULLISH A break above 1.3072 would signal scope for the recent strength to carry on targeting 1.3172. Support lies at 1.2878.
GBPUSD NEUTRAL A break above 1.6217 would open the doors for fresh extension of gains to 1.6273 and then 1.6309. Support lies at 1.6067/11."

In the previous European trading exchanges, the Euro won versus the US dollar after European Central Bank President Mario Draghi said that the central bank is ready to activate its bond-purchasing program that would drive down borrowing costs of debt-laden Euro Zone nations. But no clues were offered as to Spain's request for a bailout, that would trigger the ECB's bond-buying program. In today's European trades, the single currency is likely to decline versus the Greenback as the Eurogroup…

The staunch posture of the European Central Bank over its intervention in the bond markets is hoped to sustain the bullish price movement of the Euro against the safety bet US dollar. The EUR/USD looks to keep its gains for this week after a staggered downtrend for the latter half of September.

ECB President Mario Draghi reiterated nine times in the 54-minute press conference in Slovenia yesterday that until governments like Spain request a bailout and agree to conditions, the central…

The Euro is off to test the markets as the European Central Bank comes up with a monetary policy decision today. ECB officials gather in Ljubljana, Slovenia this October as the central bank holds its Governing Council meeting away from Frankfurt twice a year. Economists expect them to keep the key interest rate at a record low of 0.75 percent.



Market participants wait on ECB President Mario Draghi’s presentation today for clues on progress since he unveiled an unlimited government…

Rabobank - "By late September some of the optimism that lifted EUR/USD during the summer months had begun to wear thin. The combination of policy action from both the ECB and the Fed early in the month has created a surge of risk appetite which both boosted the EUR and simultaneously pressured the USD. Faced with the implementation of more budget measures in an environment of deep recession, October promises to be a challenging month for Spain. The government is clearly in no rush to suffer…

HSBC - "US: QE = USD negative: Resultant “risk on” mood takes us to higher yielding more risky currencies. “Risk off” and the USD’s safe haven status kicks in.

Eurozone: QE = EUR positive: Non-conventional easing as lowering the probability of EUR default and disintegration, thereby boosting the EUR.

Japan: QE = mild JPY positive: JGB purchases have little JPY effect, but equity market boost encourages foreign capital inflows.…

The pair is currently @ 1.2926 and sitting at the .618 Fibo. If we can break out of the pennant the next target is the 0.382 Fibo/ R4 target  @ 1.3017.  The overall target is  @ 1.3100 area. Watch the 1.3000 Psychological area for a possible failure to hit the target.  Average Daily Trading Range (ATR) for the pair is 107 pips.…

UBS - "EURUSD BULLISH A break above 1.2988 would signal fresh extension of gains to 1.3031 and then, 1.3085. Support lies at 1.2804 ahead of 1.2758.
USDJPY BEARISH Only a closing break above 78.12 would signal scope for extension of the recovery to 78.54 and then, 79.22. Support lies at 77.44 ahead of 77.13."

NBF Currency Outlook*

Current 1-Oct-12; 2012Q4; 2013Q1; 2013Q2; 2013Q3; 2013Q4

USD/CAD 0.98 1.00 0.99 0.98 0.97 0.98

US cents per CAD 1.02 1.00 1.01 1.02 1.03 1.02

EUR/USD 1.29 1.23 1.27 1.30 1.32 1.30

USD/JPY 78 77 79 80 81 81

AUD/USD 1.04 1.02 1.03 1.04 1.06 1.04

GBP/USD 1.62 1.58 1.63 1.65 1.67 1.65

USD/CNY 6.28 6.31 6.29 6.27 6.25 6.20

AUD/CAD 1.02 1.02 1.02 1.02 1.03 1.02

* forecasts for end of quarter

Source: NBF Economic…

Royal Bank of Scotland - "EUR/USD A bearish engulfing Friday should dictate today

SUP: 1.2823 1.2747 1.2701

RES: 1.2959 1.3172

Strategy: The bearish engulfing candle from Friday should dictate the theme today, wider stops require¡ above Friday’s highs at 1.2980 looking for moves to 1.2747 overall

GBP/USD Looks set to trouble the lower band at 1.5951

SUP: 1.6071 1.5951

RES: 1.6261 1.6302/09

Strategy: Expect the 1.6302 level…

In the previous European trading exchanges, the Euro rose versus the US dollar as the European leaders said that Spain is already ready to ask for a bailout from its Euro Zone partners, a condition for the European Central Bank's new bond-purchasing program to take effect. The shared currency was also aided by better-than-expected figures in the region's manufacturing sector, although worries over Spain remain. In today's European trades, the common currency is likely to extend gains versus…

UBS - "This week's key points are:
- Fed easing is priced into the dollar
- Spain presents downside risks to euro
- BoJ on hold this week but USDJPY shouldn't decline
- BoE also on hold but more easing due in November
- SNB to continue with EURCHF policy indefinitely
- Norges Bank dilemma is NOKSEK positive
- RBA to cut, stay short Australian dollar"
Mansoor Mohi-uddin, Managing Director & Head, Foreign Exchange Strategy at UBS Macro Research.