… on the current condition of the world's largest economy.

Stating that economic fundamentals remain “firm” the Fed chief,
three months before he leaves office, added that policy makers will
remain vigilant of inflationary pressures. However, earlier in the
testimony, Greenspan did caution Congress on the enormous budget deficit
that looms over the economy. For the current year, government officials
have produced a $319 billion budget deficit. Although the figure is an
improvement on last year's deficit, it is still recognized as the
third largest on record. He also added that a wave of baby boomers
would ultimately place unwanted strain on the resources. Nonetheless,
traders took the former comments as further indication that interest
rates are set to continually rise.

Technically Speaking
Finding major resistance at the confluence of the 38.2 percent fib
level from the monthly move and the upper channel trendline, the
underlying major consolidates going into the Asian session. With the
earlier momentum move higher, the currency pair ripe for a retracement
with probable floors at the 50 percent fib at 1.2876. Further downside
moves likely will be capped by the 61.8 at 1.2828.

EURJPY

Dreaming Of A Hawk
Euro bulls were somewhat surprised today as they anticipated further
hawkish comments by European Central Bank President Jean Claude Trichet.
Let alone the fact that policy makers kept interest rates at the
current 2 percent, a six decade low, Trichet noted that current monetary
policy remained “appropriate.” However, subsequently, he noted that
risks to price stability are increasing and that the central bank could
move at any time. Coupled with manufacturing activity reports that were
slightly above estimates, traders pared back euro positions as the
likelihood of rate increases, namely in December, remains thin at best.

Profit Taking And Repatriation
Further repatriation plagued the euro single currency major in the
session as corporations continued previous conversions that led dollar
strength a week ago. Additionally contributing to the downside, profit
taking ensued as the EURJPY cross approached the 141.00 figure. Helping
along the selling, major Japanese exporters were rumored to be selling
on the way down.

Technically Speaking
After topping off at the 141.18 intrasession high, the EURJPY cross is
performing in line with the longer term established channel dating back
past the beginning of the month. Subsequently breaking through the 23.6
percent fib at 140.41, the cross is consolidating momentarily at the
38.2 percent fib at 139.94. Barring deviation from the overall
parameters, price action should have continued momentum to the downside.
However, selling pressure looks to abate at the 50 percent fib as a
confluence is readily forming.

CHFJPY

Further Notions Of Profit Taking
An extension of the underlying major, CHFJPY took a beating as upbeat
interest rate statements from Chairman Greenspan coupled with profit
taking on subsequent JPY cross currency pairs pushed prices down. With
positions pared in both GBPJPY and EURJPY positions, it's only natural
that the CHFJPY pair was next.

Swiss Inflation Creep
Bolstering earlier statements by Swiss National Bank President Roth,
Swiss consumer prices rose in the month of October. Expected to rise
0.6 percent, actual figures were considerably higher, jumping 0.9
percent compared to a 0.4 rise in the previous month. This now brings
the annualized comparison to 1.3 percent. As a result of the higher
figure, future speculation may now surround the possibility of the SNB
following suit in potentially raising interest rates from the 0.75
percent that it currently resides at.

Technically Speaking
In similar fashion to the EURJPY cross, the CHFJPY has been confined in
an upward rising channel. Crashing through the 23.6 percent fib at
90.94, the pair is hovering the 38.2 percent at 90.62. Further breach
at the current floor is expected with downside momentum capped at the
nascent confluence of the lower trendline and 50 fib.

Sending money abroad? Converting currency?