EUR/USD retreats back closer to 1.0500 psychological mark
The EUR/USD pair reversed over 100-pips from an early knee-jerk spike to three-week high beyond 1.0600 handle and dropped back closer to 1.0500 psychological mark. A smart recovery in the front-end US Treasury bond yields helped the greenback to recover early lost ground to two-week lows. In fact, the overall US Dollar Index, which measures greenback's performance against a basket of currencies, is flirting with daily high and just shy of moving back into positive territory. Earlier during the day, the pair surged over 130-pips amid extremely illiquid market conditions, which aggravated a mild greenback retracement led by Thursday's disappointing US goods trade balance data that showed deficit widened in November to $65.3 billion, the highest level since March 2015.Ahead of New Year's weekend, investors are unlikely to place any big directional bets as focus remains on the US president-elect Donald Trump's proposed fiscal policies, which would determine the Fed's monetary policy stance in 2017 and eventually trigger the next leg of directional move for the major. On a sustained retracement back below 1.0500 psychological mark, the pair is likely to drift back towards 1.0470-65 support area, en-route 1.0415-10 strong horizontal support. On the upside, momentum back above 1.0530 level now seems to confront resistance near 1.0555-60 region, which if cleared might assist the pair back towards reclaiming 1.0600 handle.

GBP/USD rebounds to test 1.2300 amid slowing volumes
The pound stalled the steady decline from the Asian spike to 1.2309, as the bulls regained poise and allowed a bounce in GBP/USD back towards 1.23 handle.The renewed strength in cable is largely attributed to some fresh selling in the US dollar, after the USD bulls failed to sustain the recovery from two-week troughs.However, further upside looks restricted amid a cautious tone prevalent in the market ahead of the New Year holiday-break, as thin liquidity and irregular volatility could trigger erratic moves, similar to the ones witnessed in Asia today. In terms of technical levels, upside barriers are lined up at 1.2309 (weekly high), 1.2350 (psychological levels) and 1.2379 (Dec 22 high). While supports are seen at 1.2268 (5-DMA) and 1.2200 (round figure) and below that at 1.2141 (Oct 31 low)..

USD/JPY gains further traction, reclaims 117.00 handle
The USD/JPY pair's recovery from the vicinity of 116.00 handle gained further traction during early European session and is now building to its momentum back above 117.00 mark.Currently trading around 117.10 level, testing session peaks, the greenback, as measured by the overall US Dollar Index, staged a remarkable recovery, following an early slump to two-week lows, and has been the sole driver of the pair's sharp recovery in the past hour or so. Adding to this, a flat to positive opening in European equity markets failed to lend any support to the Japanese Yen's safe-haven appeal and further contributed to the pair's recovery momentum from two-week through, amid thin holiday trade.Later during NA session, Chicago PMI print for December might provide some impetus for short-term traders, while broader market risk-sentiment and USD price-dynamics would continue to be key determinants for the pair's movement ahead of New Year's weekend. A follow through buying interest is likely to lift the pair towards 117.25 resistance area (yesterday's high) above which a move towards 117.60 resistance seems imminent. On the downside, 116.55 level now becomes immediate support to defend and renewed weakness below this immediate support might now drag the pair below 116.00 handle support towards testing its next major support near 115.45-40 region.

AUD/USD erase early gains to weekly high
The AUD/USD pair reversed majority of its strong gains to weekly high level near 0.7250 region and has now turned absolutely flat for the day.Currently trading around 0.7220-25 band, the pair initially jumped to 6-day high in response to a broad based US Dollar sell-off, primarily led by a sharp up-surge in the EUR/USD major. The pair, however, ran through offers as the greenback was seen gaining some traction, helping the broader US Dollar Index to recover some of its early lost ground to 2-week lows. Moreover, recovery in the US treasury bond yields was further weighing on higher-yielding currencies - like the Aussie, and contributing to the pair's retracement from higher levels. However, positive sentiment surrounding commodity markets, especially copper, continues to lend support to the Australian Dollar and might limit further downslide. Moving ahead, the US Dollar price dynamics would remain a key determinant of the pair's movement on the final trading day of the year. Later during NA session, the Chicago PMI print might provide some impetus for short-term traders.A follow through retracement below session lows support near 0.7215 level, leading to a subsequent drop below 0.7200 handle, is likely to accelerate the slide towards 0.7185 horizontal support below which the pair is likely to head back towards 7-month lows support near 0.7160 region. On the upside, 0.7245-50 area now seems to have emerged as immediate hurdle, which if cleared should lift the pair towards 0.7300 handle, with 0.7280 level acting as intermediate resistance.

USD/CHF keeps the red near 1.0200
The USD/CHF pair almost reversed more-than 70% of its latest knee-jerk downward spike, but still remains in negative territory amid ongoing broad based US dollar weakness, which continues to remain the underlying theme in the Asian session on the final trading day of the year.Next of note for the major remains the US Chicago PMI data, which is expected to virtually have no impact on the USD price-action, as thin liquidity is expected to remain the main driving factor across the financial markets as we head towards the yearly close and New Year celebrations.To the upside, the next resistance is located at 1.0243 (daily high) and above which it could extend gains to 1.0301 (Dec 21 high) and 1.0331 (Nov 2015 high) next. To the downside, immediate support might be located at 1.0150 (psychological levels) and below that 1.0100 (daily S3/ 100-DMA) and from there to 1.0057 (round figure).

USD/CAD sustaining weakness below 1.3500 mark
The USD/CAD pair was seen building on to its rejection move from 1.3600 handle and is now sustaining weakness below 1.3500 psychological mark.Currently trading around 1.3480 level, off around 20-pips from session low, a sharp US Dollar retracement to 2-week lows, primarily led by of a knee-jerk spike in the EUR/USD major, kept the pair in bearish territory for the third consecutive session. Adding to this, buoyant sentiment surrounding oil market, with WTI crude oil hovering around $54.00/barrel mark, is further lending support to the commodity-linked currency - Loonie and restricting the pair's recovery.Looking at the broader picture, despite of the recent slide, the pair on Friday has managed to hold 10-day SMA support and hence, the ongoing slide could be categorized as a corrective move following post-US election sharp up-surge of over 500-pips. On the last trading day of 2016, market participants would look forward to the release of Chicago PMI, later during NA session, in order to grab some short-term trading opportunities. On the downside, 10-day SMA near 1.3460 region remains immediate support to defend below which the pair is likely to head towards its next support near 1.3415 area ahead of 1.3400 round figure mark. On the upside, recovery momentum above 1.3500 handle now seems to confront resistance near 1.3535 level above which the pair is likely make a fresh attempt towards reclaiming 1.3600 handle with 1.3575 providing some intermediate resistance.

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. We assume no liability for any loss arising from any investment made based on the information provided in this communication.