Euro rally short lived as Spanish banking woes keep pressure on the 1 2500 level

EUR/USD
Range: 1.2510-1.2549
Support: 1.2480
Resistance: 1.2680

The mini rally seen in the single currency on the open this week after the latest Greek election poll ran out of steam above 1.2620 yesterday as the market focused on the Spanish banking woes and the 19 billion Euro’s needed to bail out BFA-Bankia. Spanish PM Rajoy tried to calm the markets with comments that his county does not need any international rescue for its banks although he did admit Spain was finding it difficult to finance itself. He blamed the soaring borrowing cost on the advancing debt crisis in the eurozone and he wants the ESM to be allowed to lend directly to banks.

GBP/USD
Range: 1.5655 – 1.5683
Support: 1.5580
Resistance: 1.5780

Sterling tracks the euro lower in holiday trading with EUR/GBP now trading back below 0.8000 (GBP/EUR 1.2500). With no UK data of substance today I’d expect cable to track the fortunes of EUR/USD and with a notable weaker trend in risk I’ll expect rallies to 1.5750 to be sold with a break of 1.5600 needed for my 1.5500-1.5520 target support. The UK CBI retail survey results are released at 11am this morning.
USD/JPY
Range: 79.48-79.64
Support: 78.80
Resistance: 80.80

USD/JPY trades in the middle of the 79.30/80 range we have seen this week following positive data released in Japan overnight. The retail sales number recorded a positive reading of 5.8% following the rise of 10.8% seen last month although the jobless rate in Japan did creep up to 4.6% from 4.5% last month. The market will look for the latest signs on the US economy today with the release of consumer confidence sentiment at 3pm with a reading of 72 expected up from 69.2 last month.