Asian Market Update:

The rose against the Dollar in Asian trading after Japan’s finance minister warned that markets should be aware of the risks of one-way best against the Japanese currency.

The comments by Koji Omi echoed remarks made by officials at Group of Seven meetings in the past referring to carry trades and suggested some concern about the pace of the Yen’s slide.

Omi’s remarks also come as investors fear about whether authorities in Switzerland and Taiwan were trying to spook the market from using their currencies in carry trades by pushing short-term interest rates higher.

It is the second time in the past few weeks Omi commented on currencies, having started to say earlier this month he was watching the market carefully.

Over the weekend the Bank for International Settlements warned in its annual report about the risks of carry trades and said there was “clearly something anomalous” about the Yen’s weakness.

A drop in Japanese shares also kept the market on edge for any potential rush out from risky positions such as carry trades.

The Nikkei share average fell 0.3%, following a drop in US stocks on worries about investment bank Bear Stearns bailing out a second hedge fund it manages that invested heavily in subprime mortgages.

The market is now waiting for the Federal Reserve policy meeting this Thursday for clues on the central bank’s thinking about the economy’s health.


Technicals:

EURUSD
The move above 1.3438 indicates new strength and 1.3502 is now in focus. Support is at 1.3438 and 1.3371.

GBPUSD
A break of 2.0006 can lead to 2.0020 and then 2.0100. Support at 1.9990 and 1.9960.

USDJPY
Prices are retrieving with 123.10 now being the target. A break there will lead to 122.89. Resistance at 123.95 and then 124.14.

EURJPY
Resistance now at 166.94. A break of 165.20 support will trigger a move lower to 164.62.

AUDUSD

Bullish momentum will stay as long as prices stay above 0.8425. Next resistance at 0.8494 and then 0.8505.