By DailyFX - EURUSD - For the most part volatilities remained lower throughout the week, ticking only slightly higher in midweek action.

Now trading...

... at 5.95%, the longer term measure is
positioned for a bounce higher reflecting the jump above the 1.3100 psychological
figure in the spot. Incidentally, the short-long ratio is also suggestive,
meandering around the zero line after a decrease of roughly 20 basis points in
negative territory. Given the signals, the euro implieds are looking breakout
ready. However, technical resistance, it seems, may calm the overall indication,
potentially suppressing the longer term measure in the sessions ahead.


GBPUSD
The short term implieds dropped on the week, following a rather economic data absent
schedule for the pound sterling. The decline helped in pushing the differential
spread lower, now standing at -0.18 wide on the short-long spread. Longer term
implieds have also declined, pricing in a weaker 6.08%, compared to last week’s
approximately 6.2% offer. As a result, the spot price action can be expected to
continue its short term consolidation, until a dip below the week’s vol low. The
aforementioned will support speculation of a near term breakout, however, will need
confirmation of a technical or fundamental element.

USDJPY
Both implied measures skyrocketed in the past two sessions, following the massive
unwinding of carry trades that occurred at the beginning of the week. The longer
term measure, incidentally, jumped to the highest in weeks, now pricing in 8.15% in
New York. The short term differential additionally bounced higher, surprisingly
coming in at 1.05 wide. The suggestion, however, is keeping the range bound label
attached as activity is likely to spike lower, before recovering to the upside.
Notably, ranges in the currency major have expanded as this is now the third time in
the first quarter 2007 that the longer term measure has spiked above the 7.5%
figure.