EURUSD
Expectations of higher EUR rates keeping EUR bid despite the downgrading of Spain's rating.
EU summit was nonevent as expected as it does take quite a lot to get the rescue mechanism into place given that any agreement needs to be reformed into the Treaty.
Looks likely EurUsd to try 1.40 again this week. Medium term I am looking to reduce longs from here still. The sovereign debt issue has not gone away.

AUDUSD
Positively correlating to the EUR, AUD looks bid but efforts to attempt at 1.0250 is not convincing. Australia relies >10% of trade with Japan. This will take some off terms of trade for Australia. So I am getting a little nervous the longer AUDUSD doesn't clear 1.0250.
Then again if you are Asian based, your countries are also likely to be affected. So on balance probably not much movement there.
I am looking to reduce my longs over the next couple of weeks unless the clear break of 1.0250 is convincing.

USDJPY
Market started off buying JPY on Friday but quickly reversed. Boj pumping lots of liquidity to shore up the economy to keep it going. Japanese sovereign debt is likely to grow past it's current 200% and in the long term doesn't make it look awfully attractive.
I am looking to probably buy on dips to 81 area.

Fx views

EurUsd Hawkish comments from several officials left the market speculating higher Euro interest rates. I don't think this is likely so soon. Perhaps EUR has strenghened on back of a little disappointing US jobless claims. German local elections will bring to the fore the issue of their contribution to the Greek rescue. This will have implications to derail the formalization of the permanency of a EFSF in e Euro zone if the local elections don't go well. Watch this space. I thinly that's why EUR has not been able to pierce convincingly 1.3750. Whilst short term, I feel it's still bid, I fear it's losing momentum. Break of 1.3430 should see this fall swiftly back to target 1.30 in the coming weeks. AudUsd On the back of better risk appetite, AUD is again bid above 1.01. The highs at 1.0250 has to be taken out soon or AUD is likely to retest par and below on the back of China again raising it's RRR to now 19.5%. local rates are starting to follow suit on the back of higher commodity prices but to a lesser extent oil. This could put e pin into AUD bullishness given that RBA is unlikely to be raising interest rates till H2. Asian central banks are now on the offensive or will be on the offensive to dampen inflation flames and this could reduce the attractiveness of the carry trades. Asian carry traders beware and be careful not to be too bullish even if AUD breaks 1.02. Countries like Singapore are starting to want to let their currencies appreciate to combat inflation and others are likely to follow suit with monetary measures. Cad is seen as a good alternative. A little later on this GbpUsd Sentence talking again about inflation and rates but their economic data continue to look weak. I feel GBP strength cannot be sustained and an adjustmment maybe in store. 1.6350 resists and if long, I would turn short with stops above 1.6350. UsdJpy PM Kans facing fragmentation and this could affect the support for his fiscal plans. Mid-east tensions may continue to keep this slight bid but topside 83.80 holds court. UsdCad Oil and mid east tensions continue to fan the bullish sentiment for the Looney. Apparently foreign investments has spiked up given the low yield of keeping the currency idle. Stay long Cad for target 96.30