A coordinated plan announced Wednesday by multiple European, Australian, and North American central banks to provide international bank liquidity may ease the immediate crunch of the credit crisis and certainly reassured the forex trading market following the FOMC’s disappointing 25bp interest rate cut on Tuesday. Overall, risk aversion continued to dissipate and year-end volatility skewed technical analysis for multiple currency pairs.

With gold and other export metals retreating from highs, the AUD weakened against the U.S. dollar and Japanese yen despite the interest rate differential. According to an analysis by Westpac, inflation could be Australia’s major economic worry for 2008 following 15 years of solid economic growth.

Toward the end of the New York forex trading session, AUD/USD broke below a significant support level at 0.8676 and is trending strongly down. The pivot point is 0.8670; first resistance is at 0.8735 followed by 0.8856; first support is now at 0.8549 followed by 0.8484.

The USD appreciated against 14 of 16 most actively traded currencies after a higher than expected CPI put a limit on the amount the FOMC can lower the U.S. interest rate, setting the stage for a possible USD rally in 2008. Holiday retail sales came in much stronger than anticipated and are quite encouraging as to the strength of the U.S. economy.

The Euro retreated 1.6% against the USD this forex trading week and this retreat may be sustainable. The deciding factor is whether the international credit crunch improves sufficiently in 2008 to allow the ECB to raise interest rates. With weakness already priced into the USD, at this point the risk of depreciation has shifted to the Eurozone and the U.K.

At the close of Friday’s New York trading session, EUR/USD dropped below a key support level at 1.4525. The pivot point is 1.4497; first resistance is at 1.4583 followed by 1.4742; first support is now at 1.4338 followed by 1.4252.

U.K. housing prices continued to slip and the GBP followed suit, helping manufacturers but softening the pound sterling against USD. This sell off was also halted by the close of the New York trading session on Friday. The pivot point is 2.0254; first resistance is at 2.0362 followed by 2.0553; first support is at 2.0063 followed by 1.9955, and the break below 2.00 appears likely.

CAD continued to slide with the price of oil, dropping 1.2% against USD this week. CAD/USD is rangebound within a climbing price channel (see illustration below). The pivot point is 1.018; first resistance is at 1.0233 followed by 1.030; first support is at 1.0113 followed by 1.0060.

New Zealand awaits several significant economic releases next week, however,  economic growth appears to be slowing for 2008 and NZD/USD also sold off on Friday. The pivot point is 0.7726; first resistance is at 0.7800 followed by 0.7926; first support is at 0.7600 followed by 0.7526.

JPY declined against the USD after the Tankan business survey expressed fading confidence following a Japanese loss of  US$1B in the subprime mortgage fiasco, indicating an economic slowdown and lessening the chances of the BoJ raising their interest rate during Thursday’s meeting This currency pair, as well, sold off on Friday. The pivot point is 113.06; first resistance is at 113.92 followed by 114.44; first support is at 112.54 followed by 111.68.