FX Views
EURUSD
The Euro suffered from seemingly good U.S. non-farm payrolls out on Friday and fell to 1.29. The markets took the fastest pace of expansion in the  services industries for December(indexed at 57.1, the highest since May 2006) as a sign of better days ahead for the USD. To add on to the optimism, employers added more jobs for a 3rd month with 103,000 jobs created in December. Whilst the tone for the USD may be optimistic in the short term, the FED Chairman Bernanke had re-iterated that the U. S Unemployment statistics may take 4-5 years to see significant improvement.
Across the Atlantic the EUR continues to be plagued by Credit issues on sovereign debt. Investors are demanding higher yields to hang on to Spanish 10-year bonds over similarly dated German bonds, the highest spreads in more then a month. Even Portugal bonds are not spared and we should continue to see pressures in the credit markets which should lead to a continued weakening of the EURO.
Paying higher spreads for debt cannot be sustained and it leaves to see how the Eurozone can manage this negativity. I suspect it will get worse before it improves. This week sees Portugal and Spain coming to the market to borrow in the form of 10-year bonds. They are likely to pay over 7% for this debt. Could we see Portugal go the way of Greece and Ireland?
For now EURUSD is holding it's own above 1.29 having bounced off it this week. Will it hold?
The 1.33-1.34 had formed a triple top in a consolidation formed with a support at 1.3030 which has broken. Next stop 1.27 support and if that area gives way, we are likely to see 1.24 and then a retest of 1.1875 low established in June 2010.
For Dual Currency Investors who are still long EUR should seriously consider getting out or chance for a bounce with short tenors. The momentum of USD cannot be discounted as traders are coming into a new year with profit positions in their books over December and are likely to continue to find reasons to take those profits into their books.
Support : 1.27, 1.24 Resistance: 1.3030, 1.33-1.34

Medium term view: Don't buy what you don't need. EUR is a good carry-trade currency (borrow EUR, buy AUD)

AUDUSD
Floods are worsening with more news of the railways that carry coal to the ports flooded and unuseable. AUD took a beating (continued).
It's trading off the 98.50 area and a good support area from where AUD mounted the assault above parity and we need to see if this continues to stand firm and create a stronger based for a surge past 1 again.
Short term traders may take this opportunity to pick bottoms here. If 98.50 fails, the next level to buy AUD for the medium term is the 96 area.
What's beyond 1.0250? Try 1.05.
Yields on AUD are still one of the most attractive (around 4% p.a.)and if investors  believe that China will continue to show strong growth, this currency will still benefit from that.
Asian holders of AUD will have to be careful with being too bullish of AUD/ASX (Asian currencies) given the strong carry-effect of an appreciating Yuan and the economic boost on their own economies. For. E.g. the AUDUSD came up from 80 cents to the USD to above Par = 20-25% whilst against the SGD, the AUDSGD came up only from about 1.15-1.31.
Noneheless, AUD still looks supportive in the medium term.
Short term traders who are long from below 98.50 should watch that level closely in the coming week or two and medium term investors may attempt to build more long positions (for yield and need) on weak attempts here.
DCI investors who have a good position may use rallies to reduce some positions before 1.0250.
Support : 98.50, 96 Resistance: 1.00 and 1.0250

Medium term view: Stay long

USDJPY
JPY has appreciated the most against the USD from 94 to a low of around 80 JPY. BOJ intervened several times last year and may continue to do so to keep the JPY in check. Safe haven buying has been touted as the reason to buy JPY but Yield chasers are unlikely to bother playing in JPY with low-zero yields.
It is likely we see continued trading range between 80-85 with intervention threats when it approaches 80 and safe-haven buying as we get close to 85.
Borrwoing JPY for carry trade is a favourite past time of Japanese housewives who are tired of playing Pachinko the whole day!

EURAUD
This is at a risk of retesting it's recent lows at the low side of 1.29 and if broken, we could see a test of 1.27 and then 1.24. Scenario-wise, the Eurozone countries debt issues faced by Portugal or Spain may trigger a sell off of the EUR. The AUD was largely unscathed the last time Ireland had their cap in hand. The difference this time could be the Queensland floods that might sppok AUD longs that could save EURAUD.
Nonetheless, it is difficult to be too bullish of EURAUD and investors who are long in this cross is probably better off to have an escape plan. Resistance is now at 1.3030 and the 1.33-1.34 area.