It has been a tough year for the market participants. Currency traders had many whipsaws over the last twelve months. On the last trading day of the year, volume is expected to be thin. EUR/USD is trying to stay over 1.29 major support. We don’t expect any huge surprises today as the majority of traders are gone for holidays.

We believe that EUR/USD will go lower once the market participants find out how bad the European situation really is. Executive director at JPMorgan Chase, Matt Brady said “I think the risks in Europe will get worse before it gets better. Risk sentiment is going to be dire as we head into 2012 and I’m not a believer in being long any risk currencies”.

Yesterday, Italy sold €7 billion of debt, falling short of the Treasury’s €8.5 billion target, bringing the total raised this week to almost 20 billion euros. Borrowing costs were lower than at previous auctions of similar- maturity issues. Benchmark 10-year bonds stayed lower after the auction, with 10-year yields at 7.03% at the close. Analysts at JPMorgan said “We think the bond auction was received ok, but they didn’t get away the allotment that they wanted. Certainly with the concerns around Europe, we have no reason to believe the world’s a better place at the moment”.

Today the Asian stock markets opened slightly higher. NIKKEI started the day at 8,434.90, previous close was 8,398.89. HANG SENG opened at 18,504.06, previous close was 18,397.92. Market analyst at Monex, Toshiyuki Kanayama said “Investors increasingly feel the U.S. economy is firmer than they had expected. The economic data is looking good and that will boost stock markets, especially when concerns about Europe’s debt issues aren’t in the forefront”.

EUR/USD is trading at 1.2944 by the time of typing and for today resistances are located at 1.2996 and 1.3033. Support levels are 1.2927 and 1.2890.

GBP/USD is at 1.5410. Resistance levels are located at 1.5471 and 1.5529. Supports are located at 1.5357 and 1.5300.

USD/CHF is trading at 0.9406 by the time of typing and for today resistances are located at 0.9422 and 0.9461. Support levels are 0.9371 and 0.9346.

AUD/USD is trading at 1.0149. Resistances are located at 1.0170 and 1.0207. Support levels are 1.0106 and 1.0069.

The economic calendar is almost empty today. U.K. Nationwide House Price Index data will be released at 07:00 GMT.