FOREX INTRADAY SNAPSHOT

EUR/USD
Further gains are expected above 1.4088 as the powerful two-month uptrend threatens to extend. A wave equality target lies at 1.4125, but there is scope for 1.4165 based on the recent intraday higher low at 1.3980. Sterner resistance lies at the top end of the monthly Ichimoku cloud at 1.4185. Congestion between 1.3980 and 1.4036 will attract support, and only below the latter would concern USD bears.

GBP/USD
The corrective recovery extends to put resistance at 1.6199 under threat. This rally off 1.5978 is forming the right-hand shoulder of a head-and-shoulders top formation, which suggests a peak in the 1.6277 area should be expected. A clean break through 1.6277 would question the six-week uptrend reversal pattern, and re-open the Mar. 2 reaction high at 1.6344. A push below 1.6099 would prompt a return to the week's low at 1.5978, where the neckline lies.

USD/JPY
Central banks are manufacturing the recovery off this week's record low at 76.25, and resistance at 82.00 is being challenged. However, the technical bear trend remains intact while the Feb. 16 reaction high at 83.98 holds, and this high is protected by resistance at 83.30. A break below 79.17 is required to attract fresh bear pressure towards 78.26.

AUD/USD
Resistance at 0.9952 is under threat, as the recovery off the week's low at 0.9705 looks to extend. The intraday higher low at 0.9782 suggests a break through 0.9964 should be expected, opening 0.9995 initially, but creating scope for further gains towards the 1.618 Fibonacci extension target at 1.0057. Only a reversal below 0.9782 would bring the 0.9705 low back into the picture.

FOREX FOCUS
The Bank of Japan had better be braced for a big battle as it tries to stop the yen from rising to new record highs against the dollar. Currency intervention only works at the best of times and these are not the best of times for the yen. There is little doubt that the strength of the yen is unwarranted. The currency was overvalued by as much as 6% even before the earthquake in Japan last Friday prompted buying, as the market began to anticipate the repatriation of funds. Also, with Japanese interest rates down at virtually zero and the Bank of Japan pouring in an additional Y31 trillion of liquidity in the last four days alone, yields on the yen can hardly be described as attractive. Nonetheless, as the Bank of Japan found to its cost last September, international support for the Japanese currency remains strong. Back then, the central bank launched its largest ever solo intervention exercise, spending Y2.13 trillion in a futile attempt to stop the dollar from falling under Y85. Needless to say, the dollar kept on falling and a strong yen remained a problem for Japanese exporters as the country struggled to stop slipping back into recession. By the time the earthquake - and then the tsunami - hit Japan's north-east coast nearly a week ago, the dollar was still down at Y83. If anything, the need for a weaker yen now has become even more acute than it was last September. Since the earthquake, the currency has rallied another 8%, breaking to a new record high of Y76.25 against the dollar late on Wednesday. And the growth prospects for the Japanese economy have deteriorated rapidly. For the moment, though, the Bank of Japan is nowhere to be seen. This could be because the bank is choosing to play a cat-and-mouse game that leaves the market guessing over just what it plans to do. Or, it could be because the Japanese are hoping to get international support as the ongoing threat of nuclear contamination from the damaged nuclear reactors at Fukushima still poses a risk for financial markets in general. A weaker yen will then be in the self-interest of other major economies as much as it is now for Japan.

EUROPE
It was an extraordinary trading session in Europe, as several European central banks were seen intervening in a bid to tame the sky-high yen, but after an initial skid lower in yen crosses, the Japanese currency has regained momentum and clawed back some of its losses. Intervention from the Bundesbank, the Banque of France, the Bank of England and later the Bank of Italy came after the Bank of Japan intervened on behalf of the Japanese Ministry of Finance overnight, spending around Y1 trillion to Y2 trillion buying dollars against the yen. The European Central Bank also confirmed that it had participated in selling the Japanese currency. The central banks' efforts managed to push the euro and the dollar higher against the yen at the London open, pushing the euro to Y115.56, a two week-high, and the dollar to Y82. But the Japanese currency later pushed back up to stronger levels than it held before the European central banks' action. "Europe walked in to find the dollar close to Y82.00 against the yen," said Citibank in a note to clients, adding that this spurred speculation whether euro-area banks would step in to currency markets. "The Banque de France appeared to be first out of the gates buying the euro against the yen. [This] was followed by the ECB and Bundesbank and later the Banca d'Italia; the BOE also waded in to buy sterling against the yen." But as the yen bounced back against these currencies immediately after the intervention, Citigroup noted that "the lack of follow through has drawn a lot of 'sniggering' about the effectiveness of intervention." The yen was pushing higher as investors continued to pile into the relative safety of the currency after the Japanese Nuclear Agency said it had raised the accident scale level of the quake-damaged Fukushima Daiichi nuclear plant to level 5, similar to the severity of the accident at Three Mile Island in 1979. The agency said the increased safety warning was due to "serious damage" to the plant's reactors.

ASIA
The U.S. dollar and euro surged against the yen Friday after the Group of Seven finance ministers agreed to joint intervention to weaken the yen, as Japan struggles with multiple natural disasters and an ongoing nuclear emergency. The dollar spiked as high as Y81.84 from around Y79.50 earlier, as G-7 finance ministers issued a communique following a conference call. The dollar was recently at Y81.64. Traders said the united stand added "clout" to the announcement. It marked the first joint G-7 intervention since 2000. "We express our solidarity with the Japanese people in these difficult times, our readiness to provide any needed cooperation and our confidence in the resilience of the Japanese economy and financial sector," the communique said. "We will monitor exchange markets closely and will cooperate as appropriate." Japan's finance minister told reporters that market intervention that occurred from 0000 GMT was from authorities in Japan, and each G-7 country would intervene in their own market. "At a time when Japan is in a difficult situation, it is extremely significant that G-7 authorities agreed to act in concert and cooperate for the stability of the markets," Yoshihiko Noda said. Dealers said the U.S. dollar was likely to continue rising against the yen over the next 24 hours as central banks take their turn at providing support.

WORLD
The yen fell from a record high against the dollar Thursday, as demand for the currency in the wake of Japan's nuclear crisis was temporarily squelched by fears that officials may sell yen to curb its strength. In a seemingly counterintuitive move, demand for the yen has surged as Japan's natural disaster has rapidly transformed into a nuclear crisis that has roiled markets worldwide. On Thursday, the yen's broad strength hammered the dollar to a historical low at Y76.25, and sent the euro to its lowest level since September at Y106.50. In the last week alone, the currency has appreciated by more than 8% amid speculation that Japanese institutions were selling foreign assets in order to send money back to the disaster-stricken country. On Thursday, those flows gave way to concerns that Japan might intervene--perhaps with the help of the world's largest industrialized nations. Analysts, however, are sharply divided on the nature of the investment flows behind the surging yen. While most acknowledge that Japanese repatriation is supporting the yen, they add that widespread risk aversion was leading some investors to unwind "carry trades" that use the low-yielding Japanese currency to fund high-return, riskier positions elsewhere