Range bound ahead of EU summit

<p>EUR/USD Range: 1.2478-1.2506 Support: 1.2440 Resistance: 1.2560 The Euro market remains nervous ahead of the start of tomorrows EU summit with Spanish and Italian bond […]</p>

EUR/USD
Range: 1.2478-1.2506
Support: 1.2440
Resistance: 1.2560

The Euro market remains nervous ahead of the start of tomorrows EU summit with Spanish and Italian bond yields on the rise yesterday to lofty heights of 6.87% and 6.18% respectively. The single currency tested the 1.2440 level late in the London session yesterday as a Reuters headline hit the wires ‘ Germany’s Merkel will not have a shared liability for debt as long as she lives, the corrective headline took the Euro back to 1.2500 with adding ‘ according to sources at the coalition party meeting’. The ECB meets next Thursday the 5th of July with super Mario poised to cut rates.

GBP/USD
Range: 1.5622 – 1.5640
Support: 1.5500
Resistance: 1.5700

Sterling opens not much changed from yesterday although just above 1.5600 as the pound continues to trade with a slight bid tone despite weaker public borrowing data released yesterday. The only reason I can find for sterling strength is the lack of ability for EUR/GBP to gain ground as the cross remains below the 0.8010 former trendline support. July the 5th is when the BoE next meet with speculation that between £50-75 billion will be added to the QE programme.
USD/JPY
Range: 79.34-79.54
Support: 79.10
Resistance: 80.30

The JPY trades in a tight range overnight and with US durable goods ( consensus 0.5%) and US pending home sales (consensus 1%) the only distraction I expect month end flows and positioning adjustment to dominate the JPY despite the political uncertainty following the controversial consumption tax approval yesterday. The market still feels short JPY to me and with month end flows dominating I expect further pain to be inflicted on the shorts with a break of the 79.00-79.10 level causing further stops to be triggered.

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