Positive start to risk buoyed by China and optimism on a Greek Deal

EUR/USD

Range: 1.3156-1.3238
Support: 1.2950
Resistance: 1.3350

The Euro opened the week some 30 points higher from the close on Friday and quickly traded back above 1.3200 after week-end reports that Greece’s PM Papademos had said that his government had found the additional 325 million euro budget cuts that the EU Finance Ministers had required for the second bailout.

The ‘Risk’ trade received a further boost with news from China that the PBOC had cut their reserve requirement by 50 basis-points effective February 24th.

Today’s event will be dominated from headlines from Eurogroup meeting in Brussels.

GBP/USD
Range: 1.5825 – 1.5880
Support: 1.5750
Resistance: 1.6000

Sterling has continued to trade with a firmer tone as we start the week partly due to a stronger Euro/$ rate and a positive start to appetite for ‘risk’.

Last week saw an impressive reading for UK retail sales and the February inflation report was deemed less dovish by the market giving sterling an added boost.

This week’s main release in the UK will be the MPC minutes released on Wednesday that show the voting pattern that decided to increase QE by £50 billion to £325 billion.

USD/JPY

Range: 79.35-79.89
Support: 79.30
Resistance: 80.25

The impressive gains in last week’s star pair continued overnight with $/JPY closing in on last Augusts intervention high of 80.25.

The JPY was not helped by Japan’s January trade deficit which came in at JPY 1.475 trillion compared to forecasts of JPY 1.468 trillion and is the largest ever recorded trade deficit in Japan.

With the cross JPY market likely looking like the trading theme for 2012, a grind higher in $/JPY could test the psychological 80.00 level where no doubt Japanese exporters could be looking to hedge their exposures.