Boosting the European firewall is the next big mission ahead

Boosting the European firewall is the next big mission ahead. As the most immediate risk of a European debt contagion spilling over to other peripheral areas appeases for now, market focus has shifted from the Greek rescue package ordeal to a new chapter that has its main theme on how to increase Europe’s bailout fund, the EFSF or soon to be called ESM.

 
EUR/USD

Range: 1.3431 – 1.3468
Support: 1.3420
Resistance: 1.3480

Euro-Dollar closed in New York at 1.3455, off traded highs of 1.34869. The rate extended its recovery off late New York session pullback lows of 1.3444 to 1.3480 in early Asia, as the rate was lifted by strong demand for euro-yen out of Tokyo. Negative reaction to the Australian Labour Party leadership result, as well as black-box sales in euro-yen, saw euro-dollar drift off to 1.3445-1.3440, with markets then subdued for a while during the Oscar results. Continued selling resumed to take the rate to 1.3435 in Asia, 1.3432 into early Europe. The rate currently holds heavy in early European dealing, though demand in the area between 1.3435-1.3430 so far able to buy. A break to expose stronger demand between 1.3420-1.3400. Offers remain into 1.3480, a break to expose Friday’s high at 1.34869 with barrier interest at 1.3500 being mentioned. Stops noted above.

GBP/USD
Range: 1.5855 – 1.5887
Support: 1.5845
Resistance: 1.5900

Cable closed in New York at 1.5875, recovering off pullback lows of 1.5870 after the rate had seen extended highs of 1.5900. The recovery extended into early Asian trade on cross yen demand, the rate able to push above that New York high to extend its recent recovery to 1.5904. The reversal in yen pairs saw cable drift lower, marking lows at 1.5857 in late Asia, extending to 1.5854 into Europe.

Cable support seen placed between 1.5855-1.5845, with stops on a break of 1.5840. If stops triggered to open a deeper move toward 1.5810-1.5800. Resistance remains at 1.5900-1.5905, a break of 1.5910 to expose recent highs at 1.5929. Above here and the rate can extend its move to 1.5945-1.5955. Euro-sterling trade in Asia was contained by 0.8470-0.8481.5.

Gold
Range: 1,769.94 – 1,778.40
Support: 1,770.57
Resistance: 1,785.00

Gold continues to benefit from the risk rally tacking on over $55 last week and is holding reasonably firm in Asia with an earlier rally to 1,778.40 despite some paring back in commodity related currencies and Asian bourses. The metal was last trading around 1,771.50 and is receiving safe haven status support as EU concerns continue to dominate, and oil prices remain at 2012 highs on Middle Eastern tensions over Iran. Central bank purchases of gold, inflation threats and oil forecasts of up to $150 a barrel are all adding to underpin the metal. Resistance lies ahead towards the 1,785-1,790 level now which contained last week’s highs of 1,787.45 seen on Thursday, but a break can target 1,799.80. On the downside risk, support is seen towards Friday’s lows of 1,770.57 with a break down there opening a deeper move down to 1,760.10.