After an impasse that has last more than a year and a half in Belgium, a new government will be allowed to be formed in the next few days, agreement predicated on a budget breakthrough.  Britain is stepping up its contingency plans in case the euro zone breaks up, even though analysts believe that only Greece is currently at risk of departing the 17-nation bloc over the debt crisis. Expectations on the European Central Bank acting more aggressively are the key to see a more sustainable Euro rally. Italian 10 year yields continue to trade at incredibly high levels above 7%, with a 10-year bond auction scheduled tomorrow, when it plans to offer up to EUR 8bln. It will be interesting to see how the International Monetary Fund is going to raise €600bn given but they only have €285bn in emergency funds. Germany failed to cover a routine bond auction, Tension in global financial markets heightening and its yields began rising as well, problems with German bonds, happened sooner than expected. If the ECB doesn’t intervene, the situation is likely to deteriorate, Europe's sovereign debt woes biggest uncertainty for Japan economy to experience slowdown for time being, then resume moderate recovery, Japan economy to remain in severe state for time being; must carefully watch how recent yen rises affect Japan economy. While mortgage rates are already at about record lows, housing continues to constrain the economy, with the National Association of Realtors saying in Washington last week that the median price of U.S, Thanksgiving Sales totaled $52.4 billion, and the average shopper spent $398.62 during the holiday weekend, up from $365.34 a year earlier, Holiday sales may rise 2.8 percent this year, or about half of last year’s 5.2 percent gain Minutes from the Nov. 1-2 meeting of the Fed’s Federal Open Market Committee showed that some policy makers aren’t convinced the recovery will strengthen, saying the central bank should consider easing policy further.

Euro/dollar

Resistance for EUR/USD is seen at 1.3362 and 1.3614, with support showing at 1.3145, 1.3055 and 1.2873. EUR/USD Made another move lower, on the spread of the bond rout to the core of the core: Germany. Apart from the worsening debt crisis, a strong line is 1.3650, which worked quite well in recent weeks, and was only temporarily breached. It is one of the more distinct lines in the range. Next we have a tough line: 1.3550 provided support early in September and then switched to resistance after the fall. It proved it can work as good resistance as well.

USD/JPY

Resistance for USD/JPY currently shows up at 79.52/80.22 and 81.46, with support indicated at 77.48, 76.10 and 75.65 USD/JPY is on the rise despite growing global fears. The crisis in Europe is pushing the dollar higher, and even the “safe haven” yen retreats. Retail sales and Prelim Industrial Production are the main events this week.  Dollar/yen made a gradual climb during the week. After conquering the 77 line last weeks the pair continued higher and was eventually capped by the 77.85 line the round number of 77, remains a significant cap for the range trading that characterizes the pair and proved to be stronger now. 76.75 join the chart after providing support during the recent climb. After Japan posted a trade balance deficit, and as the dollar emerges as the only safe haven for now, there is room for gradual rises in this slow moving pair, as long as the euro crisis deteriorates.