The US dollar has continued its rise overnight as 10 year US treasury yields hit their highest levels since August, pushing above 3.7%.

The yen has also lost ground as the Bank of Japan signalled its intention to keep rates as low as possible to fight off deflation.

Sterling has also looked weak on the back of the resurgent dollar, ahead of data due out today, which is expected to show that that the UK economy is closer to pulling out of recession than previously thought.
Final figures for Q3 GDP are expected to show a contraction of -0.1% instead of the previous figure of -0.3%. The adjusted YoY figure is expected to come in at -4.9%.
The US also has a host of figures out today, including its final annualized GDP figures for Q3, as well as home sales and personal consumption data.

With thin trading volumes expected, moves are expected to be quite choppy.

EURUSD – despite squeezing up to 1.4375 yesterday, the Euro continues to remain subdued against the dollar, drifting back towards its lows last week at 1.4260/70. This downside pressure remains intact, targeting 1.4190, the 200 day moving average, then 1.4120. Given the thin trading volumes expected this week, today’s data could spark a squeeze towards 1.4420/30, but does not alter the risk for a lower Euro overall.

GBPUSD – has made new lows overnight at 1.6030, as it continues to press towards its 200 day moving average at 1.6010. The pound should find some level of support through here between 1.5980 and 1.6000. A break of this level then re-targets the lows in October at 1.5710. As with the Euro the cable could be susceptible to rallies back to 1.6300, but the prognosis is for a lower sterling overall.

EURGBP – the Euro squeezed back to 0.8920 yesterday, in fact it over-spilled to 0.8927, but the resistance has held so far. The downward momentum remains intact while below this level. The Euro seems to have built a bit of a base at 0.8850 for now. A move below targets 0.8805/10.

USDJPY – the yen finally broke above Friday’s highs, and tested the 91.40 initially in Asia with 91.47 being the high so far. The next target lies at 92.70, the October highs, while above the trend line from the lows now at 90.00. The market should also find some support at 90.70 last weeks highs.