Risk firmer ahead of EU summit

EUR/USD
Range: 1.2465-1.2525
Support: 1.2440
Resistance: 1.2560

The Euro trades with a slight bid tone this morning as investors square their shorts ahead of today’s EU summit but we still haven’t managed to break the week’s range of 1.2440-1.2530. The European council will kick off the meeting today at 2pm with expectations that discussions will centre on drawing a road map for fiscal, financial and political union with market expectations low to reduce market stress as can be seen with the continuous rise in Spanish and Italian yields. I’m slightly cautious we get a token towards a fiscal union that will catch a very bearish market short but longer term 1.2750 is formidable resistance.

GBP/USD
Range: 1.5262 – 1.5615
Support: 1.5500
Resistance: 1.5700

Sterling continues to trade in a tight range but with UK data and the EU summit beginning today the market is hopeful we can break the week’s lacklustre range. This morning the final UK GDP for Q1 will be released with consensus being much like the British summer and the England football teams recent European championships campaign with a reading of- 0.3% along with the current account balance expecting to show a deficit of £8.9 billion.
USD/JPY
Range: 79.32-79.77
Support: 79.10
Resistance: 80.30

The JPY continues to trade with a bid tone dominated by exporter buying into the month end operation. This afternoon we have the release of the US GDP data for Q1 with growth expected to be unrevised at 1.9% in the third estimate. I expect the exporter market to have offers towards the 80.00 handle whilst supports remains at 79.25-79.30 and 79.10 with large stops reported to lurk under the 79.00 level.