Risk off in tight ranges ahead of the EU Summit

<p>EUR/USD Range: 1.2500-1.2565 Support: 1.2450 Resistance: 1.2625 Euro starts the week towards the lower end of the recent 1.2450-1.2750 range which I expect to remain […]</p>

EUR/USD
Range: 1.2500-1.2565
Support: 1.2450
Resistance: 1.2625

Euro starts the week towards the lower end of the recent 1.2450-1.2750 range which I expect to remain intact before the highlight of the week on Thursday and Friday with market scepticism being that the EU Summit will just deliver the usual story that there is a plan to make a plan to solve the crisis as the can is kicked further along the never ending road. A report in the Der Spiegel over the week-end from an unpublished study sighted an EU break up would cause the German economy to shrink by 10% and unemployment would rise to 5 million. CFTC data showed a 27% reduction on speculative shorts in the Euro last week.

GBP/USD
Range: 1.5551 – 1.5595
Support: 1.5475
Resistance: 1.5650

Sterling trades with a lack of direction with calls growing for further stimulus to be added in the UK with David Miles calling for ‘at least’ £50 Billion to be added to the QE operation. CFTC data released on Friday reveals Sterling shorts reduced for 23,112 contracts to 17,153 last week. The main event for the week will be the release of Q1 GDP on Thursday with the consensus being for a dismal -0.3% reading.
USD/JPY
Range: 80.00-80.63
Support: 79.50
Resistance: 82.00

Cross JPY flows dominated again in Asia with heavy selling in EUR/JPY pushing us close to technical supports. Not much in the form of Japanese data this week with Industrial production the highlight on Friday. Exporters are still selling any rally in the pair and the CFTC data showed JPY longs rose from 12,307 contracts to 15,137 last week. I continue to think this pair will be driven by cross flow with the 79-82 range likely to continue.

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