Despite the announcement of further JPY selling interventions to lower the strong JPY by the Bank of Japan, the previous attempts have been so far unsuccessful. Reasons for this are firstly the uncertainty of many investors regarding the current situation of the European business area and the still unsolved debt crisis; and secondly the less attractive US assets. In addition, the Bank of Japan was obliged to lower the forecast for nation's economic growth from 2.2 percent to 2 percent last month in response to the increasing pressure on the domestic economy. Due to the strong JPY, the export figures were severely affected and haltered the economic recovery.

This pair is like the ultimate risk barometer right now: the Aussie has an extremely high beta to overall market risk while the yen is a traditional safe haven. Thus, in periods of risk aversion this pair tends to fall and it tends to rise when risk is “on”. As signs that stabilisation in the Eurozone develop now that the ECB has stepped in to pump the European financial system with liquidity, combined with signs that global growth may have reached its nadir at the end of 2011, then the ground is fertile for this FX cross.

The 1H AUD/JPY chart shows a market that had double bottomed after rallying above the 81.53 resistance pivot. The 1H RSI kissed 70, reflecting bullish momentum, but the market has since fallen from 81.87. It is now at 38.2% retracement of the latest upswing. If the market is to confirm the bullish breakout from this double bottom, the bulls will have to show resolve by not allowing the market to fall below 81.06(61.8% retracement). Also, if the RSI fails to break below, the bullish momentum is still maintained.

The signs of recovery of the U.S. economy are still positive and the today released latest figures should support these predictions. Especially, the reductions of the unemployment provided the market with positive stimulus. Referring to a Bloomberg forecast, the jobless rate declined by 15,000 to 384,000 from 399,000 and also the manufacturing figures increased 0.9 percent in December, which has been the greatest growth since December 2010.

For more than two months after the accord was announced, creditors and authorities still need to agree on the coupon and maturity of the new bonds to determine the total losses investors would suffer. The IMF has sought a lower coupon than the range offered by investors to ensure Greece meets the deficit targets amid a worsening economic outlook. Failure to complete the voluntary swap threatens to further undermine confidence in the EU's crisis leadership and deter investors from Asia and the U.S. from buying Europe's debt.

The currently growing concerns regarding the effectiveness of the ECB’s bond purchase measures, the strengthening signs of a negative impact of the European debt crisis on Germany’s economic growth and a likely threatening increase of interests rates for Spanish bonds at the today’s bond selling auction pushed the demand of the so-called safe-haven currency, the USD. According to Bloomberg surveys, the German manufacturing index declined in December to the worst level since summer 2009. But nevertheless, the apparently unrestrained drop of the EUR has been slowed down and the EUR was able to gain slightly against the USD to 1.2993 from 1.2983 yesterday.

Since the risk-on pop during the 11/30 US session, the Aussie has been consolidating. The 1H AUD/USD chart shows a market that has bee trading in a flag pattern. This pause came after the rally tagged the upper bollinger band (around 200 simple moving average with 3 standard deviations). The RSI was also over 70, and reflected overbought conditions in the near-term. However, the market is bullish in the short-term as the RSI reading remains above 40, with the ability to tag 70.

Yesterday, the central banks of Canada, Switzerland, Japan and the UK decided in cooperation with the European Central Bank and the U.S. Federal Reserve to lower the overnight swaps for lending by half a percentage point to 50 basis points, but initially limited it to February 2013. This intervention in the capital markets is supposed to dissipate the uncertainty of many investors and to calm down the markets. In addition, these banks will intend the implementation of a bilateral swap program targeting warrant borrowing costs. This will be one of the topics in the next ECB meeting on 8th of December, too. The market responded promptly to this announcement and pressed the JPY down close to a two-week low against the USD. Therefore, the JPY was at EUR 104.51, after having touched 104.73 yesterday. Versus the USD, the JPY rose 0.09 percent to 77.69 from 77.62 the day before. The EUR gained slightly against the USD and climbed to 1.3453.

AUD/JPY has been trading within a downward trending parallel channel over the past week and a half. This can be seen in the hourly candlestick chart below as evidenced by the lower highs and lower lows. The pair was rejected from channel resistance on Nov 13 and 18 and rebounded from the base of the channel on Nov. 14, 15, 16, and again yesterday. Price action has also faced resistance around the 55-hour simple moving average which currently comes in around the top of the channel to provided added resistance.

Bearish-Ranging Market: Since our latest update, the AUD/JPY has been sliding (failing to complete an inverted head and shoulder). The Aussie has been sliding along with other majors against the USD and JPY in late Oct-November in a period of risk-aversion. The AUD/JPY is still trading under the 200 day simple moving average. The RSI failed to push above 70, so the market is bearish to sideways. It is not completely bearish due to the ability of the market to push above the September high of 82.80 (although immediate rejected).

Prime Minister Papademos formed a government on Nov. 11 after four days of political discussion. It must implement budget measures and decisions related to an Oct. 26 European bailout amounting 130 billion euros, as well as manage a voluntary debt swap by the end of February. The German government suggested yesterday, countries should be allowed to leave the euro if the task of staying in it becomes too much of a burden. Papademos said, that the highest priority for Greece is securing the payment of an 8 billion-euro loan rate under a previous 110 billion-euro European Union rescue package.

The AUD/USD found support heading into the 11/7 US trading session and is possibly forming the second shoulder to an inverted head and shoulder pattern. It is still too early to say, and only a break above the neckline area from 1.0428 to 1.0443 completes the bottoming pattern. The 1.05 pivot will be an important one, and if the market finds resistance there it could offer a throwback to test the bottoming attempt. If the market then finds support above 1.04, we would have a clearer upside bias that can extend toward 1.0540 (61.8% retracement), and the 1.0610 pivot. A conventional pattern breakout target is the width of the pattern toward the direction of the breakout. In the AUD/USD 's case, that target is projected to 1.0650, with 1.0635 being the 78.6% retracement. If the rally is a correction to the dip that started 10/27, then the maximum upside outlook is the 1.0635-1.0650 area for now.

The raised voice against the Greece government and the issued ultimatum by the Heads of the European nations was apparently effective because Prime Minister Papandreou changed his stance concerning the referendum of the Greek population about the austerity measures and the associated retention in the European Union. This decision lowered the fluctuation in the capital markets. But at the same time, many experts and most newspapers headlined the current developments as a Greek tragedy referring to the increasing rumors about a possible resignation of Papandreou and the concerns of all observers that the minister could lose the vote of confidence. If this would be the case, new elections were the consequences. Until the political situation has been resolved and the Greek Parliament approve the negotiated terms of the 27th of October, the sixth tranche of the financial aids of the rescue bailout from the last year remained blocked. Also the ECB responded to this actual political climate and lowered its key benchmark by 0.25 percent to 1.25 percent from 1.5 percent before.

Policy makers are struggling to devise a plan that persuades markets they can stamp out the infection of other European countries. The focus on Italy underlined a push by leaders to prevent the Greece-fueled debt crisis from swamping the third-biggest euro economy and piling risks onto Germany and France. The European Commission spokesman said that Italy needs to back up commitments with specific actions and come up with a clear schedule. Prime Minister Berlusconi is writing a letter describing initiatives to fight the crisis. These proposals will be presented at the summit in Brussels.

The 1H AUD/JPY chart shows a sideways market. A large head and shoulder scenario is no longer valid as the market failed to break the neckline at 77.60. During the Thursday Asian-European session, the market was supported even higher, near 77.70, respecting the 200-period simple moving average. We have a projected trendline that acts as resistance near 79.00. A break above this, with the RSI pushing back above 60, reflects range-bound momentum.

The short term technical picture for AUD/JPY looks increasingly bullish as the pair seems to be consolidating in a bull flag pattern within an upwards parallel channel. The pair has been trading in a bullish channel for the past week (as seen below on the hourly charts). It has recently tested channel support which is just above the 55-hour SMA. Additionally, the 38.2% Fibonacci retracement of the recent rally (from the 74.65 test of channel support to the 76.80 test of channel resistance) comes in just under the 76.00 figure to provide added support.

The European Central Bank reintroduced yearlong loans for banks yesterday, as there are prospects of a capital backstop for the region's lenders which might help manage a debt crise. These loans will give banks access to unlimited cash through January 2013 as well as resume purchases of covered bonds to foster lending. Simultaneously, the European Commission is heading for a coordinated capital injection into banks. German Chancellor Angela Merkel noted that policy makers "shouldn't hesitate" in case financial institutions turn out to be undercapitalized. On 9th of October, Merkel is supposed to meet French President Nicolas Sarkozy in Berlin for their eighth one-on-one summit in 20 months. The EUR succeeded to establish its first five-day gain against the USD in three weeks on the ECB's and European Commission's action to fight the debt crisis in Europe.

Over the last weeks, the focus of public attention was fixed on Greece and Italy; therefore it wasn’t much to hear about the also affected countries of the debt crisis, Ireland and Portugal. Both nations were forced to request assistance of the European bailout in 2010. Ireland received 85 billion EUR of the rescue fund as the Irish government was constrained to support the bank system due to bursting of the real estate bubble. Experts assumed that Ireland has solved its capacity problems, especially regarding the expanding economy and the non-existence of structural issues like it was the case with Portugal. After the end of the Portuguese recession in the second quarter of the year as an increase of export figures reduced the budget deficit to 5.9 percent of the gross domestic product in 2011 from 9.1 percent in 2010, while the public debt of Greece is widening in contrast to 22 percent. Nevertheless, Portugal will have to make some hard decisions to reach the 3 percent deficit target of the EU in 2013.

AUD/JPY is continuing to decline inside the extended Descending Triangle chart pattern identified by Autochartist on the 15-minute charts. The length of this chart pattern is 118 bars. Autochartist rates the overall quality of this chart pattern at the average 5 bar level, as a consequence of the low Initial Trend (rated at one bar level), above average Uniformity (6 bars) and significant Clarity (8 bars). This chart pattern continues the medium-term daily downtrend from the strong resistance at the round price level 89.00 ,which reversed the pair down in the middle of this year (as can be seen on the second chart below). The top of this Triangle (point A on the chart below) formed when the pair reversed down from the resistance zone close to the former strong support at 77.00, now acting as the resistance after having been penetrated recently. The pair is expected to fall further in the nearest time. The strong support at 74.00 should be penetrated for the continuation of the downtrend.

AUD/JPY is continuing to decline inside the Down Channel chart pattern identified by Autochartist on the daily charts. The overall Quality of this chart pattern is measured at the 5 bar level as a result of the low Initial Trend (rated at the 2 bar level), above-average Uniformity (6 bars) and higher Clarity (7 bars). The low Initial Trend corresponds to the preceding sideways price action which developed as the price approached the resistance at the previous daily High near the round price level 88.00. At the start of this figure, this price made a few more unsuccessful attempts to move above 88.00 (as can be seen from the sideways move between points D and A), after which the pair fell sharply to support at 77.00 (point D, near the previous daily reversal Low). The pair has recently reversed down (at point C) from the level of the 50% Fibonacci Retracement of the A to D down move and is expected to fall further in the nearest time.