Carry trades in the markets have declined as investors where unwinding since Last Friday resulting in the Yen to limit further losses against the majors. On the other hand, the Dollar seems to be strengthening after statements from the Russian Finance Minister saying that he has faith in the US dollar as a world reserve currency and that there is no reason to believe that diversification is to occur.
The upbeat manufacturing data from the US last Friday provided the dollar with bullish momentum taking the EUR/USD pair to end trading during the week below the 1.40 mark. Today during the Asian session the pair continues to decline yet momentum indicators show trading near an oversold area resulting in stable trading around the 1.3970 level. A breach of this level will open the way for the pair towards 1.3780 and 1.3600 respectively.
Similar to the Euro, the Cable also weakened last Friday taking the pair back to 1.6425 where it is currently continuing to decline to hit an intraday low of 1.6359 so far. The next support level is at 1.6300 where a breach of this level will take the pair to 1.6200 and 1.6100. Momentum indicators support our outlook on the daily charts.
Concerning the USD/JPY, Friday's close was rather bullish for the pair yet the weekly closing is bearish making us believe the pair is to continue to the downside this week. Supporting our outlook is another bearish candlestick (hanging man) on the four hour charts alongside the adjustment of momentum indicators to the downside to exit an overbought area. We believe the pair is to decline today targeting 98.00 where a breach of this level will take the pair towards 97.75 as far as 98.90 remains intact.